KUMPULAN GUTHRIE BERHAD
KUMPULAN GUTHRIE BERHAD
(4001-P)
EXCELLENCE for
SUSTAINABILITY
(4001-P)
(4001-P)
Wisma Guthrie, 21 Jalan Gelenggang, Damansara Heights,
50490 Kuala Lumpur, Malaysia.
Tel: 603-2094 1644 Fax: 603-2095 7934
ANNUAL REPORT 2004
KUMPULAN GUTHRIE BERHAD
A N N UA L R E P O RT 2 0 0 4
THE COVER
Beneficial plants such as Turnera subulata seen on the cover of this year’s report
have been identified as these are very useful in suppressing bagworms in oil palm
plantations. This has reduced usage of chemical pesticide. Thus the propagation of
these plants plays an important role for a biologically-driven sustained control of
pests and is one of Guthrie’s sustainable development best practices.
The plants symbolise the Guthrie Group’s journey of excellence in sustaining its
performance in all its business operations through emphasis on sound sustainable
development practices and implementation of good corporate governance and best
practice business processes which are backed by innovative R&D in science and
technology.
01
Istana Collection, Bukit Jelutong
AnnualReport
CONTENTS
2004
Corporate Vision & Mission
02
Chairman’s Statement
66
Financial Calendar
03
Malaysia: Economic Brief
76
History of Kumpulan Guthrie Berhad
04
Indonesia: Economic Brief
77
Group Structure
08
Operations Review
Notice of Annual General Meeting
10
• Plantation Malaysia
80
Corporate Highlights
12
• Plantation Indonesia
83
Corporate Social Responsibility
16
• Property
85
Share Price and Volume Traded
19
• Manufacturing and Others
89
Group Performance Highlights
20
Research & Development
96
Group Quarterly Performance
21
Quality Assurance
99
Group Quarterly Performance Highlights
21
Group Five-Year Financial Review
22
Environment Conservation
for Sustainable Development
101
108
23
Information & Communications Technology
Group Five-Year Plantation Review
24
Organisational Capabilities and Human Capital
110
Group Five-Year Plantation Highlights
25
Values Empower Guthrie
112
Statement of Value Added
26
Financial Statements
114
Distribution of Value Added
26
Properties of the Group
209
Employees and Productivity
27
Group Area Statement
221
Corporate Information
30
Estates in Malaysia
222
Profile of Directors
32
Mills, Factories and Installations in Malaysia
223
Audit Committee
38
Estates in Indonesia
224
Statement on Corporate Governance
40
Mills in Indonesia
225
Statement on Internal Control
52
Analysis of Shareholdings
226
Enterprise-wide Risk Management
55
Group Directory
230
60
Proxy Form
Group Five-Year Financial Highlights
Management Team
02
OUR VISION
The Guthrie Group aspires to become an excellent world
class corporation in the core businesses of plantation and
property.
OUR MISSION
We are committed to:
Exceeding CUSTOMERS’ expectations through innovative
and high quality products and services.
Providing career development opportunities for EMPLOYEES
to realise their potential.
Continuously enhancing SHAREHOLDERS value.
Being a responsible corporate citizen towards the
environment and contributing to the socio-economic
development of the COUNTRIES in which we operate.
OUR VALUES
Ethical
Efficient & Effective
Quality
Caring
Trust & Cooperation
03
FINANCIAL CALENDAR
FINANCIAL YEAR END ......................................31 December 2004
ANNOUNCEMENT OF RESULTS
First Quarter ................................................................31 May
Second Quarter.......................................................26 August
Third Quarter .....................................................24 November
Fourth Quarter......................................................28 February
2004
2004
2004
2005
PUBLISHED ANNUAL REPORT AND FINANCIAL STATEMENTS
Despatch Date .............................................................20 May 2005
ANNUAL GENERAL MEETING....................................16 June 2005
DIVIDENDS
Interim
Declaration ..............................................................26 August 2004
Record Date......................................................23 September 2004
Payment Date ........................................................14 October 2004
Final
Recommendation .................................................28 February 2005
Record Date ...............................................................30 June 2005
Payment Date ..............................................................29 July 2005
04
The origin of the Guthrie Group can be traced back to 1821 when Alexander
Guthrie set up an agency in Singapore, making it the first British trading enterprise
in South East Asia. Incorporated on 25 November 1960, Kumpulan Guthrie
Sendirian Berhad (“KGSB”), was initially formed to serve as the local agent for
Guthrie Estates Agency Limited (“GEAL”). In 1965, the Guthrie Corporation Limited
(“GCL”) was formed by the merger of plantation companies which were previously
under the management of GEAL. In the same year, GCL obtained a listing on the
International Stock Exchange of London (“London Stock Exchange”) and embarked
on a diversification programme into the trading and manufacturing sectors in the
United Kingdom, Europe and United States of America.
184
Kumpulan
GUTHRIE
Berhad
YEARS
In order to accelerate the Malaysianisation of GCL’s plantation interests, Malaysian parties acquired GCL on the
London Stock Exchange in 1981. In 1982, GCL’s plantation and related interests were transferred to KGSB. In
1987, KGSB was converted to a public company and renamed Kumpulan Guthrie Berhad (“Guthrie”). Guthrie
was listed on the Kuala Lumpur Stock Exchange [now known as Bursa Malaysia Securities Berhad (“Bursa
Malaysia”)] on 29 August 1989 in what was then the largest public issue of shares in Malaysia. Two subsidiary
companies of Guthrie, Highlands & Lowlands Berhad (“H&L”) and Guthrie Ropel Berhad (“Ropel”), are also
listed on Bursa Malaysia. H&L is also listed on the London Stock Exchange.
The Guthrie Group today is a leading producer of palm oil with plantation operations spanning South East Asia,
from Kedah to Sabah in Malaysia, and from Sumatera to Sulawesi in Indonesia. As at 31 December 2004, the
Group’s land bank in Malaysia measures 105,443 hectares, while that in Indonesia measures 216,911 hectares.
In March 2001, Kumpulan Guthrie Berhad acquired interests in 20 oil palm operating companies from PT
Holdiko Perkasa and PT Gemahripah Pertiwi (the plantations of which are now known as Minamas Plantation),
thus enhancing the size of the Group’s land bank two-fold. The Guthrie Group is today one of the largest
plantation conglomerates in South East Asia.
05
Bukit Jelutong, Shah Alam – Guthrie’s premier township project
Bukit Jelutong which is its first and signature planned communities
reflects development that emphasises low density of only four units
per acre, lush greenery with numerous recreational parks, an
extensive road system with multiple accesses and underground
cabling utilities. Strategically located in the Klang Valley region and
enjoying easy access to the New Klang Valley Expressway (NKVE),
Elite Highway, Shah Alam Expressway (Kesas) and Federal Highway,
Guthrie’s other planned communities are further enhanced by the
commencement of the 25-kilometre Guthrie Corridor Expressway’s
operation in mid 2005. The Group’s other property developments
include those in Sungai Kapar Indah (Klang) and Gurun (Kedah).
In January 2004, Dato’ Abd Wahab Maskan came on board the
Guthrie Group to succeed Tan Sri Dato’ Abdul Khalid Ibrahim who
Headquartered in Kuala Lumpur, the Guthrie Group also has operations
retired as Group Chief Executive. Dato’ Abd Wahab prepared the
in Thailand. Its other businesses are manufacturing (medium density
transformation intent of the Group. Consolidation, structural
fibre-board, building materials), production and sale of planting
realignment and strengthening of corporate governance and
materials, agricultural consultancy, landscaping, resort development
operational efficiency commenced in 2004. The introduction of a
and IT services. The Group ventured into property development in
structured initiative to drive the performance-driven culture (PDC)
1994, establishing a second core business for the Group. The
started with the official launch of Mission Guthrie Excellence
property division of the Group in Malaysia still has more than 16,000
(G-Excellence) by Guthrie Group Chairman, Tan Sri Dato’ Musa Hitam,
acres of land bank in the Klang Valley, of which the Guthrie Corridor
who came on board in August 2002, at the inaugural Group Managers
Planned Communities (Bukit Jelutong, Bukit Subang, Elmina and Bukit
Conference 2004. To support a sustainable PDC, a structured and
Lagong), account for 11,650 acres.
substantive e-Learning and knowledge sharing driven by the e-Library
and Knowledge Management culture was introduced. Principles and
The property development operation is managed primarily through
practices of Balanced Scorecard’s key performance indicators (KPIs)
Guthrie Property Development Holding Berhad (“GPDH”), the
were also introduced. The Group also initiated the rationalisation of
developer known for the Bukit Jelutong premier township and other
its small plantation companies. This involves regrouping of estates
planned communities, covering an area of 2,200 acres and 1,900
which will form bigger and more efficient plantation companies.
acres of freehold land in Shah Alam respectively. Future developments
will be in Elmina and Bukit Lagong, creating new urban growth
centres along the Guthrie Corridor Expressway.
06
1821
HISTORY of
Kumpulan Guthrie Berhad
07
1821 – Alexander Guthrie established the
Guthrie agency house in Singapore.
1896 – Guthrie began to take firm root in the
Malay Peninsula by laying the foundation for
Malaya to be a major rubber producer.
1924 – Guthrie introduced oil palm to the Malay
Peninsula, which was to become the world’s
largest palm oil producer.
1960 – Kumpulan Guthrie Sdn. Berhad
(“KGSB”) was incorporated on 25 November
1960. It was initially formed to serve as the
local agent for Guthrie Estates Agency Limited
(“GEAL”), a company incorporated in the United
Kingdom (“UK”). GEAL was the agent for UKincorporated plantation companies that owned
plantations in Malaya.
1965 – The abovementioned plantation
companies merged to form Guthrie Corporation
Limited (“GCL”) which was listed on the
London Stock Exchange in 1965.
1977 – GCL, under a reorganisation plan,
transferred its plantation interests from 10 of its
UK-incorporated subsidiaries (holding
approximately 153,000 planted acres) to six
Malaysian-incorporated subsidiary companies.
Following this reorganisation, GCL further
expanded its plantation interests to the
Philippines, China and Africa.
1981 – On 7 September 1981, Permodalan
Nasional Berhad (“PNB”) acquired the entire
ordinary share capital of GCL.
1982 – GCL’s plantation interests came home to
Malaysia. In a reconstruction scheme effective
18 November 1982, GCL’s plantation assets
situated both in Malaysia and overseas
(Philippines, China and Africa), together with
the marketing and distribution network
companies situated in the UK and United States
of America (“USA”), were transferred to KGSB.
A new UK company, Guthrie Holdings Limited,
a wholly-owned subsidiary company of PNB,
was formed to hold the share capital of GCL.
As a result of the aforesaid reconstruction
scheme, Guthrie Ropel Berhad, which officially
commenced its business in 1970, became a
subsidiary company of KGSB.
1984 – KGSB acquired the entire issued share
capital of Uniroyal Malaysian Plantations Sdn.
Berhad (“Uniroyal”) from Uniroyal Incorporated,
a company incorporated in the USA, for a total
cash consideration of RM198,943,560. The
principal assets of Uniroyal (renamed Kumpulan
Jerai Sdn. Berhad) comprised five estates
planted mainly with rubber then.
1985 – In January 1985, KGSB, through its
wholly-owned subsidiary, Kumpulan Jelei Sdn.
Berhad, entered into an agreement with Kuala
Lumpur Kepong Berhad (“KLK”) to purchase
KLK’s 26.23% holding in Highlands & Lowlands
Berhad (“H&L”). The acquisition gave KGSB,
together with PNB’s 19.36% interest in H&L,
45.59% control of H&L. Following the purchase
of KLK’s 26.23% holding in H&L, KGSB made a
cash offer to acquire all the shares of H&L not
already controlled by itself or PNB. This
resulted in KGSB acquiring a further 5.41%
interest in H&L. Following this cash offer, PNB
rationalised its interest in H&L by transferring
its interest in H&L to KGSB. With the
completion of this exercise, H&L became a
Klang subsidiary of KGSB.
1999 – Syarikat Pembangunan Hartanah Guthrie
Sdn. Berhad launched the Guthrie Group’s
second property flagship, Sungai Kapar Indah in
Klang, a 570-acre integrated township.
1987 – KGSB was converted to a public
company, known as Kumpulan Guthrie Berhad
(“Guthrie”).
2001 – Guthrie signed an agreement to issue
USD395 million (RM1.5 billion) worth of Islamic
bonds, the first US dollar denominated
international Islamic bonds traded on the
Labuan Financial Exchange, to refinance its
Indonesian acquisition and operations.
1989 – Guthrie was listed on the Kuala Lumpur
Stock Exchange (now renamed Bursa Malaysia
Securities Berhad) on 25 August 1989 following
an offer for sale by PNB of 100,000,000
ordinary shares of RM1.00 each, representing
10% of the issued and paid-up share capital of
Guthrie, to the Malaysian public and Guthrie’s
employees at a price of RM2.10 per share.
1990 – The relevant reconstruction agreements
pertaining to a reconstruction scheme (“the
Scheme”), involving Guthrie, H&L and their
subsidiary companies, were executed on 19
October 1990. The objective of the Scheme was
to rationalise the operations of the Guthrie
Group which ultimately resulted in the creation
of a property development holding company,
Guthrie Property Development Holding Sdn.
Berhad [now known as Guthrie Property
Development Holding Berhad (“GPDH”)]. GPDH,
together with its group of companies, would
gradually undertake all property development
activities of the Guthrie Group.
1994 – The Guthrie Group strategically diversified
its core businesses into plantations, property
development and manufacturing. The Group
commenced its property development activity in
Bukit Jelutong with the sale of bungalow lots.
1995 – Guthrie, through its wholly-owned
subsidiary company, Guthrie Tapis Sdn. Berhad,
entered into a joint-venture agreement with PT
Pecconina Baru to form a joint-venture
company, PT Guthrie Pecconina Indonesia, to
develop an oil palm plantation in Palembang,
South Sumatra, Indonesia. The planting of oil
palms commenced in 1997.
1996 – The official laying of the foundation
stone for the Guthrie Pavilion – Building for the
Future.
1997 – Bukit Jelutong, the Guthrie Group’s
maiden property project, won the Best Planned
Township Award from the Institute of Town
Planners.
1998 – The Guthrie Pavilion was completed. It
now houses the office of GPDH, the property
arm of the Guthrie Group.
2000 – Guthrie Corridor Expressway Sdn. Berhad
was awarded the Guthrie Corridor Expressway,
a 33-year concession highway project.
2000 – Guthrie won a bid to acquire interests
in companies which are substantially involved in
oil palm cultivation covering approximately
265,000 hectares in seven Indonesian provinces.
2002 – Ladang Jeleta Bumi’s Mill Oil Extraction
Rate (OER) of 24.53% in March 2002 was the
highest extraction rate registered in the Malaysian
palm oil industry. The achievement was endorsed
by the Malaysian Palm Oil Board (MPOB).
2003 – Guthrie Property Development Holding
Berhad’s (GPDH) Community Living Project,
Denai Alam, won the coveted Malaysian
Institute of Planners’ Planning Innovation
Award. The concept is a combination of the
traditions and refinement of a country lifestyle.
2004 –
• Further Group initiatives and programmes to
strengthen and enhance its efficiency and
effectiveness were undertaken during the
year. In the drive towards excellence, Guthrie
Group-wide Mission G-Excellence was
launched during a Group Managers’ Conference
in Langkawi from 7 to 10 October 2004.
Performance Driven Culture and e-Learning
and knowledge sharing driven by the e-Library
and Knowledge Management were introduced.
• The rationalisation exercise to group the
Group’s smaller estates into bigger plantation
companies was initiated.
• The Tanah Merah SOU (Strategic Operating
Unit) comprising the Tanah Merah, Sua Betong
and Bukit Pelandok estates was awarded the
EUREPGAP (European Retailers and Producers
Good Agricultural Practice) certification, a
quality standard recognised by the Food and
Agricultural Organisation (FAO) that certifies
the Group’s ability to produce best quality
products.
With this certification, Guthrie is the first
plantation company in the world to be
granted EUREPGAP certification.
2004
08
GROUP STRUCTURE
KUMPULAN
GUTHRIE BERHAD
(Listed on Bursa Malaysia)
54.53%
HIGHLANDS &
LOWLANDS BERHAD
(Listed on Bursa Malaysia and
London Stock Exchange)
100% Sepang Nilai Estate Sdn. Berhad
100% Kumpulan Tebong Sdn. Berhad
100% Kumpulan Sua Betong Sdn. Berhad
100% Vicworld (M) Sdn. Berhad
100% Pekan Plantations Sdn. Berhad
100% Syarikat Jeleta Bumi Sdn. Berhad
100% Syarikat Yew Lian
Plantations Sdn. Berhad
100% K & K Plantations Sdn. Berhad
100% Hatawa Plantation Sdn. Berhad
100% HRU Sdn. Berhad
100% Highlands Assets
Management Sdn. Berhad
100% Highlands Estates Sdn. Berhad
100% Sanguine (Malaysia) Sdn. Berhad
24%
Boustead Bulking Sdn. Berhad
45.23%
54.77%
57.85%
GUTHRIE PROPERTY
DEVELOPMENT
HOLDING BERHAD
GUTHRIE ROPEL
BERHAD
100% Syarikat Pembangunan Hartanah
Guthrie Sdn. Berhad
100%
Augsburg (M) Sdn. Berhad
100% Paralimni Sdn. Berhad
100% Syarikat Perumahan Guthrie Sdn. Berhad
100% Guthrie Lukut Development
Sdn. Berhad
100% Accord Shipping &
Forwarding Sdn. Berhad
100% Guthrie Property Management Sdn. Berhad
(Listed on Bursa Malaysia)
100% Kumpulan Temiang Sdn. Berhad
100% Hock Guan Seng Plantations Sdn. Berhad
100% Ladang Cenas Sdn. Berhad
100% Guthrie Ropel Development Sdn. Berhad
09
100% Kumpulan Linggi Sdn. Berhad
100% Guthrie Landscaping Sdn. Berhad
100% Kumpulan Jerai Sdn. Berhad
100% Guthrie Corridor Expressway Sdn. Berhad
100% Kumpulan Kamuning Sdn. Berhad
100% The Eden Bungalow Association Sdn. Berhad
100% Guthrie Export Sdn. Berhad
100% The Whittington Hill Bungalow Association
100% Guthrie Plantation & Agricultural Services Sdn. Berhad
100% Guthrie Harta (Damansara) Sdn. Berhad
100% Chemara Laboratories Sdn. Berhad
100% Guthrie International Investment (L) Ltd. - Labuan
100% Guthrie Biotech Laboratory Sdn. Berhad
100% Kumpulan Jelei Sdn. Berhad
100% Guthrie Wood Industry Sdn. Berhad
49%
51%
100%
Guthrie MDF Sdn. Berhad
100% Right Class Sdn. Berhad
99.999%
38%
62%
Mulligan International BV - Netherlands
Integrated Brickworks Sdn. Berhad
100% Guthrie Medicare Products (NS) Sdn. Berhad
100% Guthrie Dimensional Stones Sdn. Berhad
100% Guthrie Technologies Sdn. Berhad
100% Guthrie Furniture Sdn. Berhad
PT MINAMAS
GEMILANG
0.001%
(Indonesia)
PT Minamas Gemilang and PT Anugerah
Sumbermakmur have direct interest of
between 50% and 100% in 24 companies
in Indonesia.
99.999%
100% Harvard Jerai Development Sdn. Berhad
PT ANUGERAH
SUMBERMAKMUR
0.001%
(Indonesia)
99%
Harvard Golf Resort (Jerai) Berhad
100% Harvard Hotel (Jerai) Sdn. Berhad
33%
67%
Guthrie Assets Management Sdn. Berhad
50.7% Malaysia Land Development Co. Berhad
100% Genting View Resort Management Sdn. Berhad
60%
Genting View Resort Development Sdn. Berhad
100% 100% Guthrie Tapis Sdn. Berhad
96%
PT Guthrie Pecconina Indonesia - Indonesia
100% Guthrie Siam Sdn. Berhad
49%
Muang Mai Guthrie Co, Ltd. - Thailand
100% Guthrie Overseas Limited - UK
100% Healthline Products Limited - UK
100% Guthrie Medizinische Produkte GmbH - Germany
100% Guthrie SARL - France
Note: Companies listed above are in respect of those in active operations as at 20 May 2005.
The list of the companies in the Group is available in Note 5 to the Financial Statements on pages 141 to 148.
10
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT THE ANNUAL GENERAL MEETING OF KUMPULAN
GUTHRIE BERHAD WILL BE HELD AT THE BALLROOM, MEZZANINE FLOOR, HOTEL
EQUATORIAL, JALAN SULTAN ISMAIL, 50250 KUALA LUMPUR, MALAYSIA ON THURSDAY,
16 JUNE 2005 AT 10.30 A.M. FOR THE FOLLOWING PURPOSES:
ORDINARY BUSINESS:
1.
2.
To receive and adopt the Report of the Directors and the audited
Financial Statements for the year ended 31 December 2004 and
the Auditors’ Report thereon.
7.
To reappoint Messrs. Ernst & Young as Auditors of the
Company and to authorise the Directors to fix their remuneration.
8.
AS SPECIAL BUSINESS:
To consider and, if thought fit, to pass the following Ordinary
Resolution:-
To approve the payment of a final dividend of 5% (5 sen per
RM1.00 share) less 28% Malaysian income tax.
3.
To approve the Directors’ fees and remuneration as disclosed
in the audited Financial Statements for the year ended
31 December 2004.
4.
To re-elect the following Directors who retire by rotation in
accordance with Article 102 of the Company’s Articles of
Association:
AUTHORITY TO ISSUE AND ALLOT SHARES
“That, subject always to the Companies Act, 1965, the Articles
of Association of the Company and the approvals of the relevant
governmental/regulatory authorities, the Directors be and are
hereby authorised pursuant to Section 132D of the Companies
Act, 1965 to issue and allot shares in the Company at any time
until the conclusion of the next Annual General Meeting and
upon such terms and conditions and for such purposes as the
Directors may, in their absolute discretion, deem fit provided
that the aggregate number of shares to be issued does not
exceed ten per cent (10%) of the issued share capital of the
Company for the time being.”
– YBhg. Datuk Khoo Eng Choo
– Encik Sreesanthan s/o Eliathamby
5.
6.
To elect YBhg. Dato’ Abd Wahab Maskan who, being appointed
on 30 June 2004, retires in accordance with Article 108 of the
Company’s Articles of Association.
9.
To consider any other ordinary business of the Company of
which due notice shall have been received.
To consider and if thought fit, to pass the following Resolutions:
•
•
“That pursuant to Section 129(6) of the Companies Act,
1965, YBhg. Tan Sri Dato’ Musa Hitam be reappointed as
Director of the Company to hold office until the next Annual
General Meeting.”
“That pursuant to Section 129(6) of the Companies Act,
1965, Y.M. Raja Tan Sri Muhammad Alias Raja Muhammad
Ali be reappointed as Director of the Company to hold office
until the next Annual General Meeting.”
NOTICE OF DIVIDEND ENTITLEMENT
NOTICE IS ALSO HEREBY GIVEN that the final dividend of 5% (5 sen
per RM1.00 share) less Malaysian income tax of 28%, if approved by
the shareholders at the forthcoming Annual General Meeting, will be
paid on 29 July 2005 to shareholders whose names appear in the
Register of Members (for those exempted from mandatory deposit)
and the Record of Depositors on 30 June 2005.
11
Shareholders registering for
2004 AGM
FURTHER NOTICE IS HEREBY GIVEN that a Depositor shall qualify for
dividend entitlement only in respect of:
Explanatory Notes on Special Business
•
Shares deposited into the Depositor’s Securities Account before
12.30 p.m. on 28 June 2005 in respect of shares which are
exempted from mandatory deposit;
empower the Directors to issue shares in the Company up to an amount not
Shares transferred into the Depositor’s Securities Account before
4.00 p.m. on 30 June 2005 in respect of ordinary transfers; and
delay and cost in convening a general meeting for such issuance of shares.
•
•
Shares bought on Bursa Malaysia Securities Berhad on a cum
entitlement basis according to the Rules of Bursa Malaysia
Securities Berhad.
By Order of the Board
The Ordinary Resolution proposed under item 8 of the Agenda, if passed, will
exceeding in total 10% of the issued share capital of the Company, subject to
compliance with regulatory requirements. The approval is sought to avoid any
This authority, unless revoked or varied by the Company at a general meeting,
will expire at the next Annual General Meeting.
Note on Appointment of Proxy:
A member entitled to attend and vote at the Annual General Meeting may
appoint a proxy to attend and vote in his stead. A proxy need not be a member
of the Company. The instrument appointing the proxy must be deposited with
the Company’s Share Registrar, Symphony Share Registrars Sendirian Berhad,
Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah,
50100 Kuala Lumpur, Malaysia not less than 48 hours before the time
MORIAMI MOHD (MAICSA 7031470)
appointed for holding the meeting or any adjournment thereof. A Proxy Form
is enclosed in this Annual Report. The lodging of the proxy form will not
preclude shareholders from attending and voting in person at the meeting
should they subsequently wish to do so.
MEGAT NAZIRUDIN MEGAT SHAMSUDDIN (LS 00139)
Joint Secretaries
20 May 2005
Kuala Lumpur, Malaysia
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
A total of thirteen (13) Board of Directors’ Meetings were held during the financial year ended 31 December 2004.
The Directors who are standing for re-election, election and reappointment and details of their attendance at the Board Meetings are as follows:
i.
YBhg. Datuk Khoo Eng Choo, who is standing for re-election, attended ten (10) of the thirteen (13) Board Meetings held in 2004.
ii. Encik Sreesanthan s/o Eliathamby, who is standing for re-election, attended ten (10) of the thirteen (13) Board Meetings held in 2004.
iii. YBhg. Dato’ Abd Wahab Maskan, who is standing for election, attended all the seven (7) Board Meetings held in 2004 since his appointment.
iv. YBhg. Tan Sri Dato’ Musa Hitam, who is offering himself for reappointment, attended twelve (12) of the thirteen (13) Board Meetings held in
2004.
v.
Y.M. Raja Tan Sri Muhammad Alias Raja Muhammad Ali, who is offering himself for reappointment, attended all the thirteen (13) Board
Meetings held in 2004.
Further details of Directors, who are standing for re-election, election and re-appointment, are set out in their respective profiles on pages 32 to
37 of this Annual Report.
12
CORPORATE HIGHLIGHTS
1
JANUARY04
1
Dato’ Abd Wahab Maskan was appointed Guthrie’s Group Chief Executive on 1 January.
This appointment makes him the fourth CEO of the Group.
Guthrie MDF was awarded the Best Environmental Kept Industry by the Department of
Environment, Kedah Darul Aman in the Wood Industry Category. This award recognises the
environmental conservation efforts undertaken by Guthrie MDF.
2
In response to the growing sensitivity of a number of environmental issues, namely in relation
to nutrition, food, safety and health, Kumpulan Guthrie Berhad, on 5 January became the first
in the plantation industry to implement two new systems. These systems, based on the ISO
14000 standard, are the Good Agricultural Practice (GAP) and Hazard Analysis and Critical
Control Point (HACCP). GAP and HACCP were implemented at all Guthrie estates and mills.
2
3
FEBRUARY04
3
Guthrie Chairman Tan Sri Dato’ Musa bin Hitam visited Minamas
Estates in Teluk Siak in Sumatera on 8 February. He was joined by
the Group Chief Executive and Group’s Plantation senior management.
MARCH04
4
5
4
122 staff including 38 retirees of the Guthrie Group received long
service appreciation awards at a special dinner held on 27 March.
Employees who had served the company for 15 to 30 years were
honoured at the annual event. This is in line with the Group’s mission
of being a caring corporate organisation.
5
On 19 March, Guthrie Property Development Holding Berhad (GPDH)
issued Mudharabah Medium Term Notes valued at RM400 million.
This financing exercise was undertaken to finance the development at
GPDH.
13
6
APRIL04
6
Guthrie participated in the Minggu Saham Amanah Malaysia (MSAM) in
Kepala Batas. This was the fifth consecutive time Guthrie had participated
in the MSAM. Guthrie was the event partner for the MSAM together with
Golden Hope Plantations, MIDF, NCB Holdings, Takaful Ikhlas and Takaful
Nasional.
7
The management and staff of Minamas Plantation joined hands to put
together the Work Collaboration Agreement (Perjanjian Kerja Bersama) on
1 April.
Guthrie hosted the Sixth Guthrie Classic from 29 April to 1 May at the
Harvard Golf & Country Club, Kedah.
7
MAY04
8
Guthrie Property, banking on the success of their well planned community living concept,
manifested in their flagship Bukit Jelutong Planned Community, sold an overwhelming 99% of
the much-awaited 22’x75' Green Lane collection double storey homes. A total of 207 units
were offered for sale with prices starting at RM383,000 for a standard intermediate unit. Over
1,000 house buyers queued up at the sales office for the balloting exercise.
JUNE04
8
Kumpulan Guthrie Berhad received a Merit Award at the Malaysian Business Corporate
Governance Awards 2003 from Malaysian Business magazine. Deputy Prime Minister Dato’ Sri
Najib Tun Abdul Razak presented the award for good corporate governance practice and
adherence to the Malaysian code of Corporate Governance at a special ceremony held in Kuala
Lumpur on June 25.
9
9
The Annual General Meeting (AGM), which reviewed the overall performance of Kumpulan
Guthrie Berhad in 2003, was concluded smoothly. Shareholders left satisfied with the
performance of the company and its future direction.
14
10
11
JULY04
10
Guthrie Property recorded an impressive 50% sales turnover during the first 48 hours of its Tropika
collection launch which commenced on 24 July.
AUGUST04
11
Upon successful completion of their training, 20 trainees of the 21st Rakan Jaya Diri programme,
received certificates from Dato’ Abd Wahab Maskan on 17 August at Wisma Guthrie.
The Kumpulan Guthrie team which participated in the National Day Celebration in Kuantan won
second place in the National Day Celebration Parade Competition. The team comprised staff and
workers of our estates in the vicinity of Kuantan.
12
SEPTEMBER04
12
A group of Rabobank International analysts from countries including Australia, Brazil,
China, Indonesia, India, the Netherlands and Singapore visited Ulu Remis Estate on
24 September to gain an insight into oil palm cultivation. The group was brought on a
field visit and toured palm oil mills.
A seven-member delegation from the People’s Republic of China’s Labour and Social
Safety Ministry led by Deputy Minister Bu Zhanfa visited Tanah Merah Estate on
September 20. They were accompanied by the Director and officials of Malaysia’s
Department of Human Resource.
13
Group Plantation Malaysia Division executives once again converged at the 2004 Plantation
Business Executive Seminar (PBES) which was officiated by Dato’ Abd Wahab Maskan to
share and discuss new ideas on improving estate and mill operations. Ladang Sabak
Bernam was awarded the Best Estate for the second consecutive year at the PBES.
Kumpulan Guthrie Berhad obtained a RM350 million Short Term Loan Facility from
Ambank Bank Berhad and signed the agreement on 16 September. The loan was
channelled to the Guthrie Corridor Expressway.
13
15
14
OCTOBER04
Guthrie entered into a Share Sales Agreement with Matang Manufacturing Sdn Bhd on 5 October to dispose of its entire
equity interest in Guthrie Medicare Products (NS) Sdn Berhad (GMP) and Healthline Products Limited (HPL).
14
Guthrie is set to soar to greater heights after the launch of the Mission G-Excellence campaign by Group Chairman Tan
Sri Dato’ Musa Hitam at the 2004 Group Managers’ Conference in Langkawi. Guthrie’s e-Library was also launched at
the conference.
NOVEMBER04
The Palm Oil Mill Technology Centre (POMTEC) was officially launched by Dato’ Seri Utama Haji Mohamad Haji Hasan,
Menteri Besar of Negeri Sembilan on 30 November. The mill, a smart partnership between the Group and Malaysian
Palm Oil Board (MPOB), aims to take the Malaysian palm oil industry to greater heights.
DECEMBER04
15
15
On 30 December, Minamas Plantation organised a Plantation Award Ceremony
to acknowledge the best performing Strategic Operating Unit (SOU) team in
Minamas. The event was held in Banjarmasin, Kalimantan in conjunction with
the official opening of the Regional Office there.
Guthrie Property Development Holdings Berhad (GPDH) added to its list of
achievements and enhanced its status in the property industry when it was
awarded the Corporate, Social and Environmental Responsibilities (CSR)
award by the Bahrain Malaysia International Trade & Investment Bureau.
16
16
Bukit Jelutong celebrated a 10 year anniversary of development on 6 December.
A carnival held at Guthrie Pavilion to celebrate this milestone attracted
thousands who joined in the celebrations.
16
CORPORATE SOCIAL RESPONSIBILITY
Dato’ Abd Wahab Maskan presenting a bicycle to a
student, a tsunami victim in Kuala Muda, Kedah
The world will always have dark memories of 26 December 2004 when the deadly tsunami hit the
South East Asia region and the shorelines of the Indian Ocean. Over 200,000 lives were lost in
countries like Indonesia, Thailand, India and Sri Lanka, and to a smaller extent, Malaysia. Banda Aceh
in Sumatera, Indonesia suffered the worst, with over one hundred thousand lives lost.
The disaster separated children from their parents, tore down buildings and shelter and left behind a
hideous trail of destruction. The world reacted spontaneously by sending aid to the disaster-hit areas.
Volunteers risked their lives to help the victims of the tsunami.
In Malaysia, the northern part of the Peninsular was hit by this killer wave. Guthrie played its role as
a caring corporate citizen by launching the Guthrie Tsunami Disaster Fund
in order to help disaster victims. Guthrie received numerous contributions
from staff consisting of money, clothes, food and products for daily use.
Staff contributions amounting to RM40,000 were donated to the
Indonesian victims in Aceh through the Indonesian Ambassador, KPH
Rusdiharjo, at Ladang Tanah Merah, Negeri Sembilan. Guthrie also
donated electrical items and bicycles to the tsunami victims of Kuala
Muda, Kedah.
Neighbourly commitment – Guthrie contribution to the amnesty programme
Haji Abu Hanipah (left) presenting mock-cheque to Indonesian Ambassador
As a caring and socially responsible corporate citizen in the
host country, Indonesia, Guthrie contributed to the Indonesian
Red Cross Foundation in a brief ceremony at the Vice
Presidential Palace on 8 December 2004. Guthrie, with five
other Malaysian corporations, also joined hands to help the
foundation in the amnesty programme for Indonesian workers.
17
S. Murthy (right) won the 6th Guthrie Classic title
Guthrie donated RM5,000 to “Projek Rumah Bakti” organised by Jabatan
Penjara Malaysia, to help Puan Bedah Yaakob build a new house to
replace her former one which was not safe to live in.
Rakan Jaya Diri Guthrie (RJD), a self-reliance programme, enrolled 21
students who finished their training at the Akademi Binaan Malaysia. This
programme reflects Guthrie’s commitment to support Malaysian youth by
endowing them with skills that they can use in their future careers.
Guthrie continues to organise and host the Guthrie Classic, an annual golf
tournament, which is today a much-awaited event in the Malaysian
Professional Golf Association’s (MPGA) calendar. The Sixth Guthrie
Classic was held on 29 April to 1 May 2004 at the Harvard Golf &
Country Club in Jerai, Kedah. The annual golf tournament is organised to
promote the development of sports, particularly professional golf.
“Bersama Seiring Menghadapi Globalisasi” (Together Towards
Globalisation) was the theme for this year’s National Labour Day
Celebration, held on 8 May 2004 at the Bukit Jalil Stadium. Guthrie, as a
good corporate citizen, did not miss the opportunity to participate in the
annual celebration alongside many of its corporate counterparts.
Guthrie contingent at the
National Labour Day
Celebration
Guthrie contingent participating in National Day Parade
In the spirit of national unity, Guthrie participated in the National Day Celebration in
Kuantan. The contingent won second place in the National Day Parade Competition
organised in conjunction with the celebration. The Guthrie contingent comprised staff
and workers from various estates on the outskirts of Kuantan.
Throughout 2004, the Guthrie Group through Badan Amalan Islam Kumpulan Guthrie
(BAIK) and the Human Resource Department, continued to organise donation drives
and provided financial aid to staff who had lost their loved ones.
The Guthrie Group’s CSR efforts and its commitment to the community are driven by
the “Guthrie Cares” spirit that encourages the culture of lending a hand to support
those in need.
BAIK representative (left)
presenting staff contribution
to daughter of deceased
employee
18
01
PERFORMANCE
REVIEW
19 SHARE PRICE AND VOLUME TRADED
20 GROUP PERFORMANCE HIGHLIGHTS
21 GROUP QUARTERLY PERFORMANCE
21 GROUP QUARTERLY PERFORMANCE HIGHLIGHTS
22 GROUP FIVE-YEAR FINANCIAL REVIEW
23 GROUP FIVE-YEAR FINANCIAL HIGHLIGHTS
24 GROUP FIVE-YEAR PLANTATION REVIEW
25 GROUP FIVE-YEAR PLANTATION HIGHLIGHTS
26 STATEMENT OF VALUE ADDED
26 DISTRIBUTION OF VALUE ADDED
27 EMPLOYEES AND PRODUCTIVITY
19
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
SHARE PRICE AND VOLUME TRADED
BURSA MALAYSIA SECURITIES BERHAD – JANUARY 2003 TO MARCH 2005
Jan-Mar
2005
2004
2003
2.16
2.26
2.15
2.35
2.76
2.35
2.59
2.62
2.32
6,441
4.46
13.49
20,987
4.02
14.68
22,349
3.49
18.67
Share Prices (RM)
– Closing
– High
– Low
Volume traded (’000)
Dividend yield (%)
Price-earnings ratio (times)
VOLUME TRADED
SHARE PRICE
(’000)
(RM)
6,500
3.0
5,200
2.4
3,900
1.8
2,600
1.2
1,300
0.6
0
0
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
2003
J
J
A
S
O
N
D
J
2004
HIGH PRICE
F
M
2005
LOW PRICE
VOLUME TRADED
KUALA LUMPUR COMPOSITE INDEX
CLOSING SHARE PRICE
(RM)
1000
3.0
800
2.4
600
1.8
400
1.2
200
0.6
0
0
J
F
M
A
M
J
J
A
S
O
2003
KUALA LUMPUR COMPOSITE INDEX
N
D
J
F
M
A
M
J
J
2004
A
S
O
N
D
J
F
2005
CLOSING SHARE PRICE (RM)
M
20
GROUP PERFORMANCE HIGHLIGHTS
FINANCIAL PERFORMANCE
Revenue (RM’000)
Operating profit (RM’000)
Profit before taxation (RM’000)
Profit attributable to shareholders (RM’000)
Total assets (RM’000)
Total borrowings (RM’000)
Shareholders’ equity (RM’000)
Operating profit on revenue (%)
Pre-tax profit on total assets (%)
Pre-tax profit on average shareholders’ equity (%)
Profit attributable to shareholders on average shareholders’ equity (%)
Total borrowings on average shareholders’ equity (%)
Earnings per share (sen)
Dividend per share – gross (sen)
Dividend cover (number of times)
Debt to equity ratio (number of times)
Net tangible assets per share (RM)
Revenue per RM of employment cost (RM)
Value added per RM of employment cost (RM)
%
+/-
2004
2003
2,515,607
438,775
351,710
160,442
9,234,396
3,319,452
2,949,549
3,046,927
564,556
468,702
138,834
9,111,548
2,766,940
3,072,217
(17.4)
(22.3)
(25.0)
15.6
1.3
20.0
(4.0)
17.4
3.8
11.7
5.3
110.2
18.5
5.1
16.0
4.7
94.2
(5.9)
(25.5)
(26.9)
12.8
17.0
16.0
10.0
2.2
1.1
2.66
13.9
8.0
2.1
0.9
2.77
15.1
25.0
4.8
22.2
(4.0)
6.4
2.5
7.7
2.7
(16.9)
(7.4)
1,428,825
460,760
1,434,211
343,297
(0.4)
34.2
(9.7)
PLANTATION PERFORMANCE
Oil Palm – Malaysia
Crop – FFB (tonnes) – own
– outside
Yield per mature hectare (tonnes FFB)
Mill production (tonnes)
Extraction rates (%)
– palm oil
– palm kernel
– palm oil
– palm kernel
Average selling prices (RM per tonne ex-mill)
– palm oil
– palm kernel
Profit per mature hectare (RM)
Oil Palm – Indonesia
Crop – FFB (tonnes) – own
– outside
Yield per mature hectare (tonnes FFB)
Mill production (tonnes)
Extraction rates (%)
– palm oil
– palm kernel
– palm oil
– palm kernel
Average selling prices (RM per tonne ex-mill)
Profit per mature hectare (RM)
– palm oil
– palm kernel
17.7
19.6
380,929
105,317
348,210
100,561
20.5
5.7
20.1
5.8
2.0
(1.7)
1,595
1,013
1,526
711
4.5
42.5
2,757
2,673
3.1
2,076,703
191,859
1,667,888
190,036
24.5
1.0
9.4
4.7
13.2
11.0
20.0
473,472
81,321
374,987
68,569
26.3
18.6
23.2
4.0
23.0
4.2
0.9
(4.8)
1,473
824
1,460
568
0.9
45.1
1,555
1,037
50.0
21
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
GROUP QUARTERLY PERFORMANCE
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
2004
FINANCIAL PERFORMANCE
Revenue (RM’000)
Operating profit (RM’000)
Profit before taxation (RM’000)
Profit attributable to shareholders (RM’000)
Earnings per share (sen)
Dividend per share – gross (sen)
570,260
103,823
83,155
25,321
2.5
—
669,084
138,397
124,284
66,428
6.6
5
545,601
68,631
47,315
8,018
0.8
—
730,662
127,924
96,956
60,675
6.1
5
2,515,607
438,775
351,710
160,442
16.0
10
PLANTATION PRODUCTION
Oil Palm – Malaysia
Crop – FFB (tonnes) – own
– outside
Mill production (tonnes) – palm oil
– palm kernel
280,194
88,771
74,034
21,571
358,614
112,356
93,219
25,423
418,935
135,400
112,759
30,283
371,082
124,233
100,917
28,040
1,428,825
460,760
380,929
105,317
Oil Palm – Indonesia
Crop – FFB (tonnes) – own
– outside
Mill production (tonnes) – palm oil
– palm kernel
566,337
39,592
123,045
21,761
551,468
51,504
131,234
22,715
477,774
46,659
106,631
17,769
481,124
54,104
112,562
19,076
2,076,703
191,859
473,472
81,321
GROUP QUARTERLY PERFORMANCE HIGHLIGHTS
7.0
135
6.3
120
5.6
3.5
60
2.8
240
45
2.1
160
30
80
15
0
0
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
47.3
320
1.4
0.7
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
0
0.8
75
4.2
2.5
90
83.2
400
4.9
97.0
669.1
105
545.6
480
570.3
560
6.1
150
720
6.6
800
640
Earnings Per Share (Sen)
124.3
Profit Before Tax (RM Million)
730.7
Revenue (RM Million)
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
22
GROUP FIVE-YEAR FINANCIAL REVIEW
REVENUE
Plantation
Agricultural services
Property development
Land held for property development
Manufacturing
General trading
Others
2004
RM’000
2003
RM’000
2002
RM’000
2001
RM’000
2000
RM’000
1,547,298
22,143
563,550
—
121,886
227,199
33,531
1,324,112
17,696
393,200
269,128
131,965
854,809
56,017
1,033,008
14,832
348,507
534,307
130,430
967,412
49,367
593,415
11,104
338,122
203,292
119,818
758,142
21,930
469,128
19,087
299,198
178,832
124,078
476,873
30,664
2,515,607
3,046,927
3,077,863
2,045,823
1,597,860
RESULTS
Plantation
Agricultural services
Property development
Land held for property development
Manufacturing
General trading
Others
256,246
14,098
173,196
—
(8,992)
4,030
197
289,553
9,018
86,797
221,739
(22,259)
(33,480)
13,188
218,967
8,005
73,053
432,168
(6,719)
(3,806)
(14,834)
(43,785)
4,345
93,699
194,878
(10,746)
1,641
(20,665)
53,893
10,603
81,100
148,788
(4,769)
1,641
(8,224)
Operating profit
Profit before tax
Profit after tax
Profit/(Loss) attributable to shareholders
438,775
351,710
289,727
160,442
564,556
468,702
302,128
138,834
706,834
551,537
367,034
302,488
219,367
126,115
89,902
(3,445)
283,032
249,087
170,694
91,762
ASSETS EMPLOYED
Property, plant and equipment
Land held for property development
Associated companies
Concession asset
Other investments
Long-term trade receivables
Advances for plasma plantation projects
Advances for KKPA projects
Deferred exchange differences
Deferred tax assets
Goodwill on consolidation
Net current assets/(liabilities)
5,583,147
343,790
14,141
657,193
2,550
61,968
18,552
16,659
—
219,616
276,696
570,736
5,874,598
321,859
11,261
451,276
2,550
123,936
23,679
14,045
—
180,882
296,149
468,456
5,545,555
382,348
9,628
157,349
4,550
50,166
23,070
10,562
—
219,816
325,586
329,037
5,262,840
477,364
176,047
28,937
4,550
97,208
22,499
—
—
222,886
366,310
(368,536)
3,245,373
444,477
12,172
11,400
4,550
94,083
—
—
5,791
227,952
—
1,755,821
7,765,048
7,768,691
7,057,667
6,290,105
5,801,619
23
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
2004
RM’000
2003
RM’000
2002
RM’000
2001
RM’000
2000
RM’000
CAPITAL EMPLOYED
Share capital
Reserves
1,005,419
1,944,130
1,001,207
2,071,010
1,001,125
1,801,497
1,000,292
1,452,769
1,000,292
1,530,474
Shareholders’ equity
Minority interests
Long-term borrowings
Long-term payable
Deferred tax liabilities
Deferred income
Retirement benefits
2,949,549
1,541,987
2,502,855
—
750,797
9,922
9,938
3,072,217
1,610,683
2,061,729
287,392
711,189
15,748
9,733
2,802,622
1,524,765
1,977,972
127,263
615,415
1,498
8,132
2,453,061
1,444,724
1,760,682
14,467
600,363
10,099
6,709
2,530,766
1,246,912
1,770,246
—
236,753
9,483
7,459
7,765,048
7,768,691
7,057,667
6,290,105
5,801,619
16.01
10.00
2.22
2.66
13.87
8.00
2.10
2.77
30.21
8.00
5.25
2.47
PER SHARE STATISTICS
Earnings/(Loss) – net (sen)
Dividend – gross (sen)
Dividend cover (number of times)
Net tangible assets (RM)
(0.34)
8.00
(0.06)
2.09
9.17
11.00
1.05
2.53
GROUP FIVE-YEAR FINANCIAL HIGHLIGHTS
600
35.0
3,150
540
31.5
60
03
02
01
00
0
04
03
02
01
9.2
350
10.5
7.0
(0.3)
120
14.0
13.9
180
700
04
17.5
16.0
240
21.0
249.1
1,050
300
24.5
126.1
1,400
0
468.7
360
28.0
351.7
1,750
420
1,597.9
2,100
480
2,045.8
2,450
2,515.6
2,800
30.2
3,500
551.5
Earnings/(Loss) Per Share (Sen)
3,077.9
Profit Before Tax (RM Million)
3,046.9
Revenue (RM Million)
3.5
00
0
04
03
02
01
00
24
GROUP FIVE-YEAR PLANTATION REVIEW
2004
2003
2002
2001
2000
1,428,825
460,760
1,434,211
343,297
1,243,344
230,017
1,455,903
224,531
1,563,847
266,616
80,717
19,346
100,063
73,214
27,237
100,451
69,313
30,937
100,250
70,928
25,722
96,650
74,932
20,677
95,609
17.7
19.6
17.9
20.5
20.9
380,929
105,317
348,210
100,561
303,683
84,868
327,542
96,218
323,231
107,113
20.5
5.7
20.1
5.8
20.7
5.8
19.7
5.8
18.4
6.1
Average selling prices (RM per tonne ex-mill)
– Palm oil
– Palm kernel
1,595
1,013
1,526
711
1,238
652
830
433
1,012
714
Profit/(Loss) per mature hectare (RM)
2,757
2,673
1,226
(73)
2,076,703
191,859
1,667,888
190,036
1,502,899
144,811
918,525
93,608
—
—
156,983
4,677
161,660
151,024
11,728
162,752
145,168
17,372
162,540
140,801
21,875
162,676
—
—
—
13.2
11.0
10.4
6.5
—
473,472
81,321
374,987
68,569
329,524
60,465
208,572
39,737
—
—
23.2
4.0
23.0
4.2
22.7
4.2
22.4
4.3
—
—
Average selling prices (RM per tonne ex-mill)
– Palm oil
– Palm kernel
1,473
824
1,460
568
1,273
576
867
396
—
—
Profit per mature hectare (RM)
1,555
1,037
778
198
—
OIL PALM – MALAYSIA
Crop – FFB (tonnes) – own
– outside
Mature hectares
Immature hectares
Total planted hectares
Yield per mature hectare (tonnes FFB)
Mill production (tonnes)
– Palm oil
– Palm kernel
Extraction rates (%)
– Palm oil
– Palm kernel
OIL PALM – INDONESIA
Crop – FFB (tonnes) – own
– outside
Mature hectares
Immature hectares
Total planted hectares
Yield per mature hectare (tonnes FFB)
Mill production (tonnes)
– Palm oil
– Palm kernel
Extraction rates (%)
– Palm oil
– Palm kernel
641
25
01
02
03
04
05
06
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FINANCIAL STATEMENTS
GROUP FIVE-YEAR PLANTATION HIGHLIGHTS
MALAYSIA
INDONESIA
Oil Palm Planted Area/FFB Production
Oil Palm Planted Area/FFB Production
(’000 Tonnes)
(’000 Hectares)
(’000 Tonnes)
(’000 Hectares)
200
2200
1,440
180
1980
1,280
160
1,120
140
960
120
800
100
36
640
80
27
480
60
320
40
160
20
Mature Area
(’000) Hectares
Production
(’000) Tonnes
20.0
01
0.0
00
Extraction Rate (%)
Palm Oil
Extraction Rate (%)
Palm Kernel
140.8
145.2
1,502.9
918.5
21.9
4.3
4.2
6.5
10.4
320
160
0
480
396
320
610
867
714
800
568
1,012
960
433
480
1,120
830
711
610
01
Extraction Rate (%)
Palm Kernel
824
1,238
1,280
652
800
02
Extraction Rate (%)
Palm Oil
576
1,526
1,410
1,013
960
03
1,273
1,600
1,595
(RM)
1,600
1,120
0
Average Selling Prices Realised (Ex mill)
(RM)
1,280
04
Yield Per Mature
Hectare (Tonnes FFB)
1,473
02
Average Selling Prices Realised (Ex mill)
1,410
11.0
2.5
Yield Per Mature
Hectare (Tonnes FFB)
220
Production
(’000) Tonnes
5.0
4.0
5.8
5.8
5.7
2.3
13.2
7.5
6.1
10.0
6.9
5.8
12.5
03
440
15.0
9.2
04
160
04
03
Palm Oil
(RM Per Tonne)
02
660
17.5
11.5
0
880
01
Mature Area
(’000) Hectares
23.2
20.5
19.7
19.6
20.1
20.9
18.4
22.5
17.9
20.7
20.7
17.7
20.5
(Tonnes FFB/%)
4.6
1100
Yield Per Mature Hectare/Extraction Rates
25.0
13.8
02
Immature Area
(’000) Hectares
23.0
16.1
17.4
03
(Tonnes FFB/%)
18.4
151.0
1,667.9
11.7
04
1320
22.4
Yield Per Mature Hectare/Extraction Rates
4.7
74.9
1,563.8
00
4.2
Immature Area
(’000) Hectares
01
1540
22.7
02
23.0
03
25.7
27.2
04
0
0
1760
1,460
0
19.3
9
30.9
45
20.7
54
18
70.9
1,455.9
69.3
1,243.3
63
73.2
1,434.2
80.7
72
1,428.8
81
157.0
2,076.7
1,600
90
01
Palm Kernel
(RM Per Tonne)
00
0
04
03
Palm Oil
(RM Per Tonne)
02
01
Palm Kernel
(RM Per Tonne)
26
STATEMENT OF VALUE ADDED
2004
RM’000
VALUE ADDED
Revenue
Purchase of goods and services
Value added by the Group
Investment income
Finance income
Finance expense
Share of results of associated companies
Value added available for distribution
DISTRIBUTION
To Employees
Employment cost
To Government
Taxation
To Shareholders
Dividends
Minority interests
Retained for re-investment and future growth
Depreciation/Amortisation
Retained profit
2003
RM’000
2,515,607
(1,455,946)
3,046,927
(1,890,914)
1,059,661
1,350
30,312
(121,627)
2,900
1,156,013
1,042
25,477
(123,206)
833
972,596
1,060,159
390,696
393,514
61,983
166,574
72,267
129,285
66,076
163,294
230,190
88,175
197,943
72,758
972,596
1,060,159
DISTRIBUTION OF VALUE ADDED (RM’000)
2004
2003
To Employees - Employment cost 390,696
To Employees - Employment cost 393,514
To Government - Taxation 61,983
To Government - Taxation 166,574
To Shareholders - Dividends and Minority Interests 201,552
To Shareholders - Dividends and Minority Interests 229,370
Retained for re-investment and future growth Depreciation/Amortisation and Retained Profit 318,365
Retained for re-investment and future growth Depreciation/Amortisation and Retained Profit 270,701
27
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CORE SERVICES
FINANCIAL STATEMENTS
EMPLOYEES AND PRODUCTIVITY
Employees by Classification
54,142
54,000
56,212
60,000
48,000
42,000
36,000
30,000
24,000
Employees by Ethnic Composition
60,000
2003
48,000
54,000
42,000
Executive Staff
Non-Executive Staff
Workers
52,759
2004
50,984
0
3,330
6,000
758
12,000
860
3,264
18,000
36,000
30,000
24,000
0
2004
Bumiputera
3,560
3,829
254
3,362
6,000
228
12,000
3,590
18,000
2003
Chinese
Indian
Productivity - Revenue
60
54
43.3
42
50.4
48
36
30
24
Productivity - Value Added
20
16
16.7
14
Per RM Employment
Cost (RM)
Per Employee
(RM’000)
12
10
8
6
4
2.7
2003
17.6
18
2004
2.5
6
0
7.7
12
6.4
18
2
0
2004
Per RM Employment
Cost (RM)
2003
Per Employee
(RM’000)
Others
28
29
02
CORPORATE
FRAMEWORK
30 CORPORATE INFORMATION
32 PROFILE OF DIRECTORS
38 AUDIT COMMITTEE
40 STATEMENT ON CORPORATE GOVERNANCE
52 STATEMENT ON INTERNAL CONTROL
55 ENTERPRISE-WIDE RISK MANAGEMENT
60 MANAGEMENT TEAM
30
CORPORATE INFORMATION
BOARD OF DIRECTORS
BOARD COMMITTEES
CHAIRMAN
Executive Committee
Tan Sri Dato’ Musa Hitam (Chairman)
Raja Tan Sri Muhammad Alias Raja Muhammad Ali
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin
Datuk Mohamed Adnan Ali
Dato’ Abd Wahab Maskan
Tan Sri Dato’ Musa Hitam
DIRECTORS
Dato’ Abd Wahab Maskan (Group Chief Executive)
Raja Tan Sri Muhammad Alias Raja Muhammad Ali
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin
Datuk Nik Mohamed Affandi Nik Yusoff
Audit Committee
Datuk Khoo Eng Choo (Chairman)
Datuk Mohamed Adnan Ali
Dato’ Muhammad Nawawi Arshad
Sreesanthan s/o Eliathamby
Datuk Mohamed Adnan Ali
Datuk Alladin Hashim
Datuk Khoo Eng Choo*
Dato’ Muhammad Nawawi Arshad*
Finance & Tender Committee
Datuk Mohamed Adnan Ali (Chairman)
Datuk Nik Mohamed Affandi Nik Yusoff
Dato’ Muhammad Nawawi Arshad
Dato’ Abd Wahab Maskan
Sreesanthan s/o Eliathamby
Sreesanthan s/o Eliathamby*
* Independent Directors
Remuneration Committee
Raja Tan Sri Muhammad Alias Raja Muhammad Ali (Chairman)
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin
Datuk Khoo Eng Choo
Datuk Alladin Hashim
Nomination Committee
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin (Chairman)
Datuk Khoo Eng Choo
Datuk Alladin Hashim
ESOS* Committee
Datuk Nik Mohamed Affandi Nik Yusoff (Chairman)
Datuk Alladin Hashim
Sreesanthan s/o Eliathamby
*(Employees’ Share Option Scheme)
31
COMPANY SECRETARIES
PRINCIPAL BANKERS
Moriami Mohd (MAICSA 7031470)
Megat Nazirudin Megat Shamsuddin (LS 00139)
Malayan Banking Berhad
Bumiputra-Commerce Bank Berhad
RHB Bank Berhad
HSBC Bank Malaysia Berhad
REGISTERED OFFICE
Wisma Guthrie
21 Jalan Gelenggang
Damansara Heights
50490 Kuala Lumpur, Malaysia
Telephone : 603-2094 1644
Facsimile : 603-2095 7934
Website
: www.guthrie.com.my
SHARE REGISTRAR
Symphony Share Registrars Sdn. Berhad
Level 26, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia
Telephone : 603-2721 2222
Facsimile : 603-2721 2530
603-2721 2531
AUDITORS
Ernst & Young
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur, Malaysia
Telephone : 603-2087 7000
Facsimile : 603-2095 5333
FORM OF LEGAL ENTITY
Incorporated on 25 November 1960 as a
private limited company under the
Companies Act, 1965. Converted to a public
company on 2 December 1987.
PLACE OF INCORPORATION
AND DOMICILE
Malaysia
STOCK EXCHANGE LISTING
Listed on the Main Board of Bursa Malaysia
Securities Berhad on 25 August 1989.
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32
PROFILE OF DIRECTORS
TAN SRI DATO’ MUSA HITAM – Chairman
YBhg. Tan Sri Dato’ Musa Hitam, aged 71, Malaysian, has been a
Non-Independent Non-Executive Director and Chairman since
12 August 2002. He is Chairman of the Executive Committee of the
Board of Kumpulan Guthrie Berhad. He attended twelve (12) of the
thirteen (13) Board Meetings held in the financial year under review.
He is also Chairman of Lion Industries Corporation Berhad.
Tan Sri Musa received his Bachelor of Arts degree from the University
of Malaya and Masters degree in International Relations from the
University of Sussex, United Kingdom. He has since been awarded
with various honours, including Honorary Doctorates from the
University of Sussex, United Kingdom and Universiti Malaysia Sabah,
and fellowships from the Malaysian Institute of Management and the
Centre for International Affairs, Harvard University, USA. He served
briefly as Senior Lecturer at the University of Malaya.
Before becoming Malaysia’s fifth Deputy Prime Minister and Minister
of Home Affairs from 1981 to 1986, Tan Sri Musa held various key
government posts, including that of Chairman of Federal Land
Development Authority (FELDA), Deputy Minister of Trade & Industry,
Minister of Primary Industries (1974 – 1978) and Minister of
Education (1978 – 1981). Between 1990 and 1991, he was Malaysia’s
Special Envoy to the United Nations and from 1995 to 2002 he was
the Prime Minister’s Special Envoy to the Commonwealth Ministerial
Action Group. Tan Sri Musa also led the Malaysian delegation to the
UN Commission on Human Rights from 1993 to 1998 and was
elected Chairman of the 52nd Session of the Commission in 1995.
Tan Sri Musa has no family relationship with and is not related to any director
and/or major shareholder of Kumpulan Guthrie Berhad, except by virtue of
being a nominee Director of Permodalan Nasional Berhad, and does not have
any conflict of interest with Kumpulan Guthrie Berhad.
33
DATO’ ABD WAHAB MASKAN
YBhg. Dato’ Abd Wahab Maskan, aged 54, Malaysian, was appointed
as a Non-Independent Executive Director on 30 June 2004. He is a
member of the Executive Committee and the Finance & Tender
Committee of the Board of Kumpulan Guthrie Berhad. He attended all
the seven (7) Board Meetings held during the financial year under
review since his appointment.
He was appointed the Group Chief Executive of Kumpulan Guthrie
Berhad on 1 January 2004 and, subsequently, was appointed a
Director of its subsidiary companies, Highlands & Lowlands Berhad,
Guthrie Ropel Berhad and Guthrie Property Development Holding
Berhad. Other public companies in which he is a Director are Pelaburan
Hartanah Nasional Berhad and Pengurusan Danaharta Nasional Berhad.
Dato’ Abd Wahab was appointed as member of the Financial Reporting
Foundation of Ministry of Finance effective 28 January 2005.
Dato’ Abd Wahab has held positions as Group Chief Executive Officer
of Golden Hope Plantations Berhad, Managing Director and Chief
Executive Officer of Negara Properties (M) Berhad, General Manager
of Island & Peninsular Berhad and Director of Development in Urban
Development Authority (UDA).
He has held directorship in Malaysian and overseas companies in the
European Union and Asia, both listed and non-listed companies. His
directorship and leadership experience covers property development
and investment, engineering and construction, oil refinery and
oleochemical, estates and processing management, trading and
marketing, manufacturing and retailing, resorts and leisure, in both
the public and private sectors.
Dato’ Abd Wahab obtained his Bachelor of Science degree in
Management (Real Estate), England. He is a Fellow of the Institution
of Surveyors (Malaysia) and a Fellow of the Royal Institution of
Chartered Surveyors (England and UK).
Dato’ Abd Wahab has no family relationship with and is not related to any
director and/or major shareholder of Kumpulan Guthrie Berhad and does not
have any conflict of interest with Kumpulan Guthrie Berhad, except by virtue of
being the Group Chief Executive of Kumpulan Guthrie Berhad. He does not hold
any share in Kumpulan Guthrie Berhad, Guthrie Ropel Berhad and Highlands &
Lowlands Berhad.
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34
3
3
RAJA TAN SRI MUHAMMAD ALIAS RAJA MUHAMMAD ALI
Y.M. Raja Tan Sri Muhammad Alias Raja Muhammad Ali, aged 72,
Malaysian, has been a Non-Independent Non-Executive Director since
20 May 2002. He is Chairman of the Remuneration Committee and a
member of the Executive Committee of the Board of Kumpulan
Guthrie Berhad. He attended all the thirteen (13) Board Meetings held
in the financial year under review.
He is Chairman of Highlands & Lowlands Berhad, a subsidiary
company of Kumpulan Guthrie Berhad. Other public companies in
which he is a director are Malayan Banking Berhad, Kuala Lumpur
Kepong Berhad, Batu Kawan Berhad, Sime Darby Berhad, Mayban
Fortis Holdings Berhad and Cerebos Pacific Limited (Singapore). He
is also Chairman of Felda-Johore Bulkers Sdn. Berhad and
Consolidated Plantations Berhad.
Raja Tan Sri Muhammad Alias obtained his Bachelor of Arts (Honours)
degree in Geography from the University of Malaya, Singapore, and a
Certificate in Public Administration from the Royal Institute of Public
Administration, London. He also attended the Advanced Management
Program at Harvard Business School, Boston, USA.
Raja Tan Sri Muhammad Alias held various posts while in the
Malaysian Government service, among which, were as District Officer,
Principal Assistant Secretary with the Ministry of Defence, State
Development Officer, Pahang with the Ministry of National & Rural
Development and Director General of the Federal Land Development
Authority (FELDA). His last post, prior to retirement in June 2001,
was as Group Chairman of FELDA.
Raja Tan Sri Muhammad Alias has no family relationship with and is not
related to any director and/or major shareholder of Kumpulan Guthrie Berhad,
except by virtue of being a nominee Director of Permodalan Nasional Berhad,
and does not have any conflict of interest with Kumpulan Guthrie Berhad.
4
4
TAN SRI DATO’ DR. WAN MOHD. ZAHID MOHD. NOORDIN
YBhg. Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd Noordin, aged 65,
Malaysian, is a Non-Independent Non-Executive Director since 20 May
2002. He is Chairman of the Nomination Committee and a member of
the Executive Committee and Remuneration Committee of the Board
of Kumpulan Guthrie Berhad. He attended all the thirteen (13) Board
Meetings held in the financial year under review.
He is the Non-Executive Chairman of Guthrie Property Development
Holding Berhad and Director of Guthrie Ropel Berhad, both of which
are subsidiary companies of Kumpulan Guthrie Berhad.
Other companies and institutions in which Tan Sri Wan Mohd. Zahid
is Chairman are University Teknologi Mara (UiTM), Federal Power
Sdn. Berhad, Furukawa Sdn. Berhad and Kolej Universiti Teknologi
dan Pengurusan Malaysia. He is also a director of Permodalan
Nasional Berhad, Amanah Saham Nasional Berhad, Yayasan Felcra
Berhad, Perbadanan Usahawan Nasional Berhad and Universiti Tun
Abdul Razak.
Tan Sri Wan Mohd. Zahid obtained his Bachelor of Arts (Honours)
degree in Sociology and Anthropology from University of Malaya,
Masters in Development Education from Stanford University,
California, USA and Doctorate (Ph.D) in Sociology of Education from
University of California, Berkeley, California, USA. He also attended
the Advanced Management Program at Harvard Business School,
Boston, USA.
Tan Sri Wan Mohd. Zahid had served as a teacher, School Principal
and held various positions with the Ministry of Education, including
as Planning Officer and Deputy Director, Educational Planning &
Research Division, Chief Inspectorate of Schools, Director of
Curriculum and Deputy Director-General. He had also served as
Director of Education of Negeri Sembilan and Kelantan. His last post
prior to retirement in December 1997 was as Director-General of
Education of Malaysia.
Tan Sri Wan Mohd. Zahid has no family relationship with and is not related to
any director and/or major shareholder of Kumpulan Guthrie Berhad, except by
virtue of being a nominee Director of Permodalan Nasional Berhad, and does
not have any conflict of interest with Kumpulan Guthrie Berhad.
35
5
5
DATUK KHOO ENG CHOO
6
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6
DATUK NIK MOHAMED AFFANDI NIK YUSOFF
YBhg. Datuk Khoo Eng Choo, aged 62, Malaysian, has been an
Independent Non-Executive Director since 4 June 2002. He is
Chairman of the Audit Committee, and member of the Nomination
Committee and Remuneration Committee of the Board of Kumpulan
Guthrie Berhad. He attended ten (10) of the thirteen (13) Board
Meetings held in the financial year under review.
YBhg. Datuk Nik Mohamed Affandi Nik Yusoff, aged 61, Malaysian,
has been a Non-Independent Non-Executive Director since 20 May
2002. He is the Chairman of the Employees’ Share Option Scheme
(ESOS) Committee and a member of the Finance & Tender Committee
of the Board of Kumpulan Guthrie Berhad. He attended all the thirteen
(13) Board Meetings held in the financial year under review.
He is also a Non-Executive Director of Highlands & Lowlands Berhad
and Guthrie Property Development Holding Berhad, subsidiary
companies of Kumpulan Guthrie Berhad.
Datuk Nik Mohamed Affandi obtained his Bachelor of Arts (Honours)
degree in History (International Relations) from University of Malaya,
Diploma in Public Administration from University of Malaya and a
Masters in Public Policy and Administration from University of
Wisconsin, USA.
Other public companies in which he is an independent non-executive
director are Kontena Nasional Berhad, MNI Holdings Berhad and
Ranhill Berhad. He was formerly the Chairman of Tanjong Public
Limited Company and a director of Powertek Berhad.
He is currently the Chairman of Malaysian Institute of Management.
Datuk Khoo is a Chartered Accountant. For over a decade prior to
2002, Datuk Khoo had served in key leadership positions in
Pricewaterhouse and PricewaterhouseCoopers in Malaysia, Asia and
its world’s firm. He also held significant appointments that were made
by the Malaysian Government. He served in senior capacities in
councils of professional and management bodies in Malaysia and
Asia, and was Chairman of the Asian Association of Management
Organisations. He is the Chairman of eckhoo Associates Sdn. Berhad.
Datuk Khoo has no family relationship with and is not related to any director
and/or major shareholder of Kumpulan Guthrie Berhad, and does not have any
conflict of interest with Kumpulan Guthrie Berhad. Datuk Khoo holds 2,000
ordinary shares in the Company.
He held various posts while in the Malaysian Government Service,
among which, were as Director of State Economic Planning Unit,
Pahang State Government, Deputy Director of Supply and Contracts
Division, Ministry of Finance, Secretary, Foreign Investment
Committee in the Prime Minister’s Department, Secretary, Capital
Issues Committee and Director, Government Sector Companies
Monitoring Division in the Ministry of Finance. He was also Deputy
Managing Director of Khazanah Nasional Berhad. His last post prior
to retirement in February 1999 was as Director-General of Majlis
Amanah Rakyat (MARA).
Datuk Nik Mohamed Affandi has no family relationship with and is not related
to any director and/or major shareholder of Kumpulan Guthrie Berhad, except
by virtue of being a nominee Director of Permodalan Nasional Berhad, and
does not have any conflict of interest with Kumpulan Guthrie Berhad.
36
7
7
DATUK MOHAMED ADNAN ALI
8
8
DATUK ALLADIN HASHIM
YBhg. Datuk Mohamed Adnan Ali, aged 62, Malaysian, has been a
Non-Independent Non-Executive Director since 31 May 2002. He is
Chairman of the Finance & Tender Committee and a member of the
Executive Committee and Audit Committee of the Board of Kumpulan
Guthrie Berhad. He attended all the thirteen (13) Board Meetings held
in the financial year under review.
YBhg. Datuk Alladin Hashim, aged 66, Malaysian, has been a NonIndependent Non-Executive Director since 25 November 2002. He is
a member of the Nomination Committee, Remuneration Committee
and Employees’ Share Option Scheme (ESOS) Committee of the
Board of Kumpulan Guthrie Berhad. He attended all the thirteen (13)
Board Meetings held in the financial year under review.
He is also a Director of Highlands & Lowlands Berhad, a subsidiary
company of Kumpulan Guthrie Berhad. Other companies in which he
is a director are Bintulu Port Holdings Berhad, Pos Malaysia &
Services Holdings Berhad, Ladang Tabung Haji Sdn. Berhad, Amanah
Raya Asset Management Sdn. Berhad, Timah Langat Holdings Sdn.
Berhad and Transmile Group Berhad.
He is the Non-Executive Chairman of Guthrie Ropel Berhad, a
subsidiary company of Kumpulan Guthrie Berhad. Other public
companies in which he is a Director are PK Resources Berhad, UAC
Berhad and Timberwell Berhad.
Datuk Mohamed Adnan is a Fellow, Chartered Institute of
Management Accountants, U.K.. He was formerly Accountant-General,
Malaysia. He had served as Accountant with various ministries in
Government Department such as Ministry of Trade and Industry, and
Ministry of Energy and Public Works. He was also a Senior Manager,
Investment with Employees Provident Fund, Malaysia; Treasurer,
Universiti Islam Antarabangsa Malaysia and Bursar, Universiti
Teknologi Malaysia.
Datuk Mohamed Adnan has no family relationship with and is not related to
any director and/or major shareholder of Kumpulan Guthrie Berhad, except by
virtue of being a nominee Director of Permodalan Nasional Berhad, and does
not have any conflict of interest with Kumpulan Guthrie Berhad.
Datuk Alladin obtained his Bachelor of Agricultural Science from the
University of Malaya and Masters of Science in Agricultural
Economics from the University of Massachusetts, USA. He attended
the executive development program of the Harvard Business School.
He is a Fellow of the Academy of Sciences Malaysia.
He had served Federal Land Development Authority (FELDA) from
1964 in various capacities, and was the Director-General from 1979
to 1989. He had also served as Chairman of the Malaysian Rubber
Board.
Datuk Alladin Hashim has no family relationship with and is not related to any
director and/or major shareholder of Kumpulan Guthrie Berhad, except by
virtue of being a nominee Director of Permodalan Nasional Berhad, and does
not have any conflict of interest with Kumpulan Guthrie Berhad.
37
9
9
DATO’ MUHAMMAD NAWAWI ARSHAD
10
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SREESANTHAN S/O ELIATHAMBY
YBhg. Dato’ Muhammad Nawawi Arshad, aged 66, Malaysian, is an
Independent Non-Executive Director. He was appointed to the Board
on 31 May 2002. He is a member of the Finance & Tender Committee
and Audit Committee of the Board of Kumpulan Guthrie Berhad. He
attended all the thirteen (13) Board Meetings held in the financial year
under review.
Encik Sreesanthan s/o Eliathamby, aged 44, Malaysian, has been an
Independent Non-Executive Director since 31 May 2002. He is a
Member of the Finance & Tender Committee, Audit Committee and
Employees’ Share Option Scheme (ESOS) Committee of the Board of
Kumpulan Guthrie Berhad. He attended ten (10) of the thirteen (13)
Board Meetings held in the financial year under review.
He is a Non-Executive Director of Guthrie Ropel Berhad, Guthrie
Property Development Holding Berhad and Guthrie Corridor
Expressway Sdn. Berhad (GCESB). He is also Chairman of GCESB.
He is a Director of Guthrie Corridor Expressway Sdn. Berhad, the
wholly-owned subsidiary company of Kumpulan Guthrie Berhad and
also a Director of Chemical Company of Malaysia Berhad.
Dato’ Muhammad Nawawi is Chairman of M. Nawawi & Co. Sdn.
Berhad, DTZ Debenham Tie Leung (M) Sdn. Berhad and DTZ Nawawi
Tie Leung Sdn. Berhad, and was Director of JKP Sdn. Berhad. He had
served as a Committee Member of International Assets Valuation
Standards Committee and Committee Member and President of
Institution of Surveyors Malaysia, President of International Real
Estate Federation (FIABCI) Malaysia, and Deputy World President of
FIABCI. He had also served as Vice President of the Asean Valuers
Association. Dato’ Muhammad Nawawi is a Chartered Surveyor from
College of Estate Management, London and Fellow, Institution of
Surveyors, Malaysia. He was formerly the Director-General, Valuation,
Ministry of Finance, Malaysia and Director of CH Williams, Talhar &
Wong Sdn. Berhad.
Encik Sreesanthan is an Advocate & Solicitor and a Partner with the
legal firm of Messrs. Kadir, Andri & Partners. He was formerly a Legal
Assistant and later a Partner with the legal firm of Messrs. Zain &
Co.. Subsequent to that, he was a partner in the legal firm of Messrs.
Zul Rafique & Partners.
Dato’ Muhammad Nawawi has no family relationship with and is not related to
any director and/or major shareholder of Kumpulan Guthrie Berhad. He does
not have any conflict of interest with Kumpulan Guthrie Berhad.
Encik Sreesanthan has no family relationship with and is not related to any
director and/or major shareholder of Kumpulan Guthrie Berhad and does not
have any conflict of interest with Kumpulan Guthrie Berhad.
Encik Sreesanthan obtained his degree in law from the University of
Malaya and a Masters in Law from the University of Oxford, U.K.. He
is a Member of the Investment Committee, Amanah Saham Wawasan
2020. He is also an accredited mediator of the Malaysian Mediation
Centre, and a member of the Malaysian Central Depository Advisory
Committee and Investigating Tribunal Panel of the Advocates &
Solicitors’ Disciplinary Board.
38
AUDIT COMMITTEE
YBhg. Datuk Khoo Eng Choo* – Chairman
YBhg. Datuk Mohamed Adnan Ali
YBhg. Dato’ Muhammad Nawawi Arshad*
Encik Sreesanthan s/o Eliathamby*
The Audit Committee shall review, appraise, report and make
appropriate recommendations to the Board on:
•
The quality and effectiveness of the entire accounting and internal
control system of the Group.
•
The adequacy of the annual audit programme by both the Internal
Auditors and the External Auditors and the reports of the Internal
Auditors and External Auditors relating thereto.
•
The adequacy of the scope, functions and resources of the
Internal Auditors and whether they have the necessary authority
to carry out their work.
•
The assistance given by the employees of the Group to the
External Auditors.
•
The propriety of accounting policies adopted by Management and
accepted by the External Auditors, where alternatives are also
acceptable.
•
The effects of any change in accounting principles or of any
development emanating from the accounting profession or any
statutory authority.
•
The adequacy of the disclosure of information essential for a fair
and full presentation of the financial affairs of the Group.
•
The quarterly results and year-end financial statements, prior to
the approval by the Board, focusing particularly on:
– changes in or implementation of major accounting policy
changes;
– significant and unusual events; and
– compliance with accounting standards and other legal
requirements.
* Independent Non-Executive Directors
COMPOSITION
The Audit Committee of Kumpulan Guthrie Berhad (“Audit
Committee”) presently comprises four (4) Directors of the Board of
Kumpulan Guthrie Berhad (“Board”), the majority of whom, including
the Chairman, are Independent Non-Executive Directors.
PRIMARY PURPOSES
The Audit Committee shall:
•
Provide assistance to the Board in fulfilling its fiduciary
responsibilities relating to the corporate accounting and reporting
practices of Kumpulan Guthrie Berhad and its subsidiary
companies (“Group”).
•
Maintain, through regularly scheduled meetings, a direct line of
communication between the Board and the Internal Auditors as
well as the External Auditors.
•
•
Avail to the Internal Auditors and External Auditors private
confidential audience at any time the Internal Auditors and
External Auditors desire and request through the Chairman, with
or without the prior knowledge of Management.
Material issues arising from the reports of the Internal Auditors
and External Auditors and whether appropriate action is being or
has been taken based on the recommendations of the Internal
Auditors and External Auditors.
•
•
Act upon the Board's request to investigate and report on any
issues or concerns with regard to the Group.
Any significant difficulties encountered or material discoveries and
findings made by the Internal Auditors or External Auditors.
•
Any related party transaction and conflict of interest situation that
may arise including any transaction, procedure or course of
conduct that raises questions of management integrity.
•
The firm of External Auditors retained by the Group and the fees
payable to the External Auditors and any change in their fees, and
recommendation, if any, to retain or replace such firm in the
ensuing year.
FUNCTIONS
The functions of the Audit Committee include the functions set out
below and such other functions as may be determined by the Board
from time to time.
39
01
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PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
MEETINGS
REPORTS/MINUTES
The Audit Committee held eleven (11) meetings during the financial
year ended 31 December 2004. The Chief Finance Officer and the
Group Controller, Internal Audit, Kumpulan Guthrie Berhad, together
with the Company Secretary were in attendance at the eleven (11)
meetings. YBhg. Datuk Mohamed Adnan Ali and YBhg. Dato’
Muhammad Nawawi Arshad attended all the meetings whilst Encik
Sreesanthan s/o Eliathamby attended nine (9) and YBhg Datuk Khoo
Eng Choo attended eight (8) of the eleven (11) meetings of the Audit
Committee held in 2004.
Detailed audit reports by the Internal Auditors, together with
responses by Management, were circulated to the Group Chief
Executive and Heads of the respective Business Units, Divisions/
Departments of the Company. Minutes of meetings of the Audit
Committee were circulated to all members of the Board, and
significant issues were discussed at Board Meetings.
Representatives of the External Auditors and other officers of the
Company were also invited to brief the Audit Committee on specific
issues.
At the conclusion of each meeting, recommendations were made for
the Management to improve on internal controls, procedures and
systems of the Group, wherever appropriate.
ACTIVITIES
A summary of the activities of the Audit Committee in the discharge
of their functions and duties during the year under review is as
follows:
•
Reviewed the quarterly financial statements of the Group and
ensured compliance with approved accounting standards and
adherence to other legal and regulatory requirements.
•
Evaluated the audit planning strategy of the Internal and External
Auditors to confirm the groundwork for the annual audit of the
Group.
•
Assessed the risk management activities of the Group.
•
Reviewed the significant issues and audit findings arising from
the annual audit of the Group by the External Auditors.
•
Reviewed and appraised the audit reports by the Internal
Auditors.
•
Reviewed the allocation of option shares pursuant to the
Employees' Share Option Scheme of the Company.
•
Reviewed the various internal control systems of the Group.
•
Reviewed the Internal audit planning memorandum and budget
for year 2005.
INTERNAL AUDITORS
In the discharge of its duties, the Audit Committee is strongly
supported by the Internal Auditors of the Company. The Internal
Auditors’ role is to evaluate and report on the adequacy, integrity and
effectiveness of the Group’s overall system of internal control.
The Internal Auditors also carried out audit programmes which
focused on the management of the Group’s significant corporate risks
and executed audit plans approved by the Audit Committee. In
conducting their independent audit, the Internal Auditors placed
emphasis on a risk-based auditing approach which forms an integral
part of the audit plans. The audit findings and recommendations,
which also highlighted areas of non-compliance with the Group’s
policies, procedures and guidelines, were submitted to the Audit
Committee for review.
Due to the nature of their functions, the Internal Auditors are well
placed to undertake investigations on any suspicion of fraud or
operational failures reported to them within the Group, on behalf of
the Audit Committee. Such regular monitoring is essential to ensure
the integrity and effectiveness of the Group’s system of internal
control.
STATEMENT ON EMPLOYEES’ SHARE OPTION SCHEME
(ESOS)
The Audit Committee hereby verifies that during the financial year
under review, the actual allocation of option shares pursuant to the
Second ESOS of Kumpulan Guthrie Berhad (“Scheme”) to eligible
employees had been made in accordance with the criteria of allocation
of option shares as set out in the By-Laws governing the Scheme and
the guidelines of the Scheme.
40
STATEMENT ON CORPORATE GOVERNANCE
THE BOARD OF DIRECTORS OF KUMPULAN GUTHRIE BERHAD (“GUTHRIE” OR “THE COMPANY”) IS
PLEASED TO REPORT TO SHAREHOLDERS THAT THROUGHOUT THE FINANCIAL YEAR ENDED
31 DECEMBER 2004, THE BOARD HAD CONTINUED TO PRACTISE GOOD CORPORATE GOVERNANCE IN
DIRECTING AND MANAGING THE BUSINESS AND AFFAIRS OF THE COMPANY AND ITS SUBSIDIARY
COMPANIES (“KUMPULAN GUTHRIE GROUP” OR “THE GROUP”) AND, THUS, DISCHARGING ITS PRINCIPAL
RESPONSIBILITY TOWARDS PROTECTING AND ENHANCING LONG-TERM SHAREHOLDERS’ VALUE AND
INVESTORS’ INTERESTS CONSISTENT WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE
(“CODE”).
Composition of the Board
The Board believes that effective corporate governance is premised on
three (3) underlying principles namely, independence, accountability
and transparency.
Based on these premises, the Board is of the opinion that an effective
Board is determined by its composition. The Board has a wellbalanced composition in which the substantial shareholders are
adequately represented, whilst the interests of the minority
shareholders are protected by the independent directors.
The Board presently comprises ten (10) members, three (3) of whom
are independent Directors and, thus, the Company is in compliance
with the Listing Requirements of Bursa Malaysia Securities Berhad
(“Bursa Malaysia”) for the financial year under review. The profiles of
each member of the Board are set out on pages 32 to 37 of this
Annual Report.
The Directors of the Company are professionals from diverse
backgrounds with expertise and experience in various fields such as
economics and investment, finance, public services, education,
international relations, accounting, legal, plantation management and
property development, which enable them to bring broader
perspectives and depth in any Board discussion and deliberation.
The presence of three (3) independent Directors on the Board, namely
YBhg. Datuk Khoo Eng Choo, YBhg. Dato’ Muhammad Nawawi
Arshad and Encik Sreesanthan s/o Eliathamby, confers a strong
independent element on the Board. The independent Directors play an
important role in objectively assessing the feasibility of business
proposals and strategies, and examining the impact of such proposals
on the Company’s stakeholders.
Chairman and Group Chief Executive
As a matter of good governance, the Chairman, who is a NonIndependent Non-Executive Director, has separate and distinct duties
and responsibilities from the Group Chief Executive.
The Chairman of the Company plays a pivotal role in ensuring that
Directors are properly briefed on issues arising at Board meetings in
order to make effective contributions as Board members. As part of
good governance, the Chairman encourages healthy debate on issues
on the agenda and provides a reasonable time for discussion on
issues raised at meetings.
The Group Chief Executive is responsible for the day-to-day
operations of the Group’s business, which include implementing the
policies and strategies adopted by the Board and clarifying matters
relating to the Kumpulan Guthrie Group’s business to the Board. The
Group Chief Executive’s in-depth knowledge of the Group’s affairs
contribute significantly towards managing the direction of the Group
to achieve its goals and objectives.
This separation of powers, combined with the presence of three (3)
independent Directors, ensures a balance of power and authority and
provides a safeguard against the exercise of unfettered power in
decision-making.
41
Senior Independent Non-Executive Director
01
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PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
YBhg. Dato’ Muhammad Nawawi Arshad is the senior independent
Non-Executive Director of the Board to whom the Shareholders can
convey their concerns on issues affecting the Company and the
Group, other than through the Chairman.
The Board took note of the recent amendments to the Listing
Requirements of Bursa Malaysia via a letter dated 7 October 2004
(“CEP Amendments”) which stated that from the year 2005 onwards,
the board of directors of listed companies will assume the onus of
determining or overseeing the training needs of their directors.
Re-election of Directors
Principal Duties and Responsibilities of the Board
Article 102 of the Company’s Articles of Association provides that at
least one-third of the Directors (including the Managing Director, if
any) for the time being, is required to retire at every Annual General
Meeting (“AGM”) and be subject to re-election, at least once in every
three years.
The Board plays a primary role in corporate governance. Guided by
the Code, the Board is of the opinion that it is able to lead and
control the Company and the Group through the discharge of the
following responsibilities:
Directors who are over seventy (70) years of age are required to
submit themselves for reappointment annually, in accordance with
Section 129(6) of the Companies Act, 1965. Presently, there are two
(2) Directors of the Company who are subject to such reappointment.
•
Determine the Strategic Plan for the Group;
•
Oversee the conduct of the Group’s businesses;
•
Identify and manage risks affecting the Group;
•
Review adequacy and integrity of the Group’s internal control
systems;
•
Implement succession planning for timely succession of
management within the Group; and
•
Maintain effective communication with shareholders and
investors.
Number of Directorship in Other Companies
Each of the Directors of the Company holds not more than ten (10)
directorships in public listed companies and not more than fifteen
(15) in other companies (other than listed companies). This ensures
the Directors’ commitment, resources and time are focused for an
effective input to the Board. The directorships of each Director are set
out in the Profile of Directors.
Continual Training of Directors
The Directors of the Company have attended and completed the
Mandatory Accreditation Programme conducted by Bursa Malaysia
Training Sdn. Berhad. They have also been attending the Continuing
Education Programmes (CEP) which are necessary to ensure that
Directors are kept abreast on various issues having relevance to the
constantly changing environment within which the business of the
Group operates.
Directors were also informed and encouraged to attend various
professional programmes conducted by various professional bodies.
Fiduciary Duties of Directors
The relationship between a Director and the Company is one based
on fiduciaries. The fiduciary duties owed by Directors to the Company
require them to act bona fide in the best interests of the Company,
as a whole. In this respect, the Directors of the Company exercise
their powers on behalf, and for the benefit, of all shareholders rather
than the majority on whose vote they are ostensibly appointed to the
Board. These fiduciary obligations are owed by the Directors to the
Company on an individual basis.
42
The Board ensures that all its Directors declare their interests in any
situation which could put the Directors in a position of conflict of
interest with the Company. These include interests, whether direct or
indirect, in contracts or proposed contracts with the Company or any
of its subsidiary companies, related or associated companies, as soon
as practicable after the relevant facts have come to his knowledge.
The Director(s) concerned will abstain from any decision-making
process in which they are interested party. Transactions involving
Directors which are deemed related party transactions are disclosed
in the Annual Report.
Board Meetings
The Board meets on a scheduled basis, at least four (4) times a year.
During the financial year ended 31 December 2004, there were
thirteen (13) Board Meetings held and all the Directors in office
attended more than 50% of the Board Meetings for the full financial
year. The attendance of the Directors at the Board Meetings in 2004
is set out in the Profile of the respective Directors on pages 32 to 37
of this Annual Report.
All matters arising, deliberations and conclusions of the meetings of
the Board are clearly and accurately recorded in minutes of meetings
by the Company Secretary, confirmed by the Board and signed as a
correct record by the Chairman.
At each regularly scheduled Board meeting, the Board deliberates on
a formal schedule of matters reserved specifically for the Board’s
deliberations and approval. This ensures that the Board retains full
and effective control over the Company.
The Board approves the Group’s financial statements for the period
ended for each quarter and reviews the performance of the Group’s
businesses as against their budgets and targets. The Board also
reviews policies and strategic issues affecting the Group’s businesses
and approves acquisition and disposals of assets of the Company and
its subsidiaries that are material to the Group. At appropriate times,
presentations on business developments/proposals are also made to
the Board by Management and/or consultants/advisers.
The consideration and approval of the annual Group Budget is a
significant annual exercise by the Board in establishing the goals of
the Group for the following year which involves an assessment of the
projected performance of the Group’s businesses. The Group Budget
is revised quarterly based on the actual performance of the preceding
quarters and expectations in performance for the subsequent
quarters.
At appropriate times, the Board also considers the principal risks
affecting the business of the Group and the measures that could be
taken to mitigate such risks. A yearly audit planning memorandum
submitted by the External Auditors of the Group to the Audit
Committee sets out the Strengths, Weaknesses, Opportunities and
Threats (SWOT) Analysis for the Group which identifies and highlights
the possible options that can be implemented to mitigate the impact
of any business risk. The External Auditors, also on annual basis,
issue a Management Letter raising issues on risks affecting the
operations of the Group. The Board, through its various committees,
addresses and monitors the risks and concerns affecting the Group.
43
01
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PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
Access to information and advice
The objectives of the remuneration policy are:
The Board has full and unrestricted access to all information
pertaining to the Group’s businesses and affairs, whether as a full
Board or in their individual capacity.
•
to ensure that individual rewards and incentives fairly relate to the
performance of the individual, the Company and the interests of
shareholders; and
•
to attract and retain the most qualified and experienced Executive
Directors and senior executives with the necessary abilities to
effectively run the businesses of the Kumpulan Guthrie Group
which, in turn, maximise performance of the Group for the benefit
of shareholders.
The Board recognises the enhanced role of the Company Secretary in
ensuring good corporate governance. The Company Secretary is the
liaison between the Board, the Management and individual Directors.
All Directors have full access to the advice and services of the Joint
Company Secretaries of the Group who advise the Board on the
Company’s policies and procedures, Directors’ responsibilities under
the respective legislations and regulations, and the Company’s
compliance with the relevant laws, regulations and regulatory
requirements.
The Directors may, if necessary, obtain independent professional
advice in the furtherance of their duties from external consultants, at
the Company’s expense.
The Remuneration Committee seeks independent professional advice,
where appropriate, and has information on compensation and salary
levels of other companies in similar industry of comparable size, for
executives with similar skills, qualifications and experience for the
purpose of reviewing the salaries and benefits of staff of the
Kumpulan Guthrie Group.
Level and Determination of Remuneration
The Board also believes in adopting a hands-on approach to the
Group’s business activities, as part of the Board’s assessment of its
effectiveness as the decision-making body of the Group. When
necessary, the Directors also visit locations of business units that
provide an insight on operational matters which would assist the
Board to make effective decisions relating to the Group.
In setting individual remuneration packages for Executive Directors
and senior executives, consideration is given to appropriate basic
salary, benefits-in-kind, performance related bonuses, participation in
the Company’s Employees’ Share Option Scheme and long-term
incentive plan which commensurate with their responsibilities, whilst
taking into account corporate and individual performances.
REMUNERATION OF DIRECTORS
The level of remuneration of the Non-Executive Directors had taken
into consideration their increased duties and responsibilities under the
Code, the Listing Requirements of Bursa Malaysia and under the
Companies Act, 1965.
Remuneration Policy
The Board of Directors of Kumpulan Guthrie Berhad, has established
a Remuneration Committee, which is responsible for making
recommendations on the framework, policy and procedures to
determine and review the specific remuneration packages of the
Executive Directors and senior executives of the Kumpulan Guthrie
Group.
44
Amount of remuneration
The fees allocated to each Non-Executive Director, which was approved by the shareholders of the Company at its AGM
held on 18 June 2003, is RM40,000 per annum for each Director. The fees for the non-executive Chairman of the Company,
however, remains at RM60,000 per annum. In addition to these fees, the Chairman and the members (who are NonExecutive Directors) of each Committee of the Board are also entitled for a fee of RM10,000 and RM8,000 per annum (for
each member) respectively.
The shareholders of the Company had also in the aforesaid AGM, approved a meeting allowance of RM500 for each
Director for attendance at each meeting of the Board and the respective Committees of the Board, and the provision of
medical benefits for each of the Non-Executive Directors similar to those provided to executives of Kumpulan Guthrie
Berhad.
During the financial year ended 31 December 2004, the appropriate components of the Directors’ remuneration paid or
otherwise made available from the Group are in the following manner:a)
Aggregate remuneration of Directors categorised into appropriate components:
Executive Director
RM’000
b)
Non-Executive Directors
RM’000
Fees
Salaries & Allowances
Bonus
Benefits-in-kinds
Other Emoluments
—
406
—
35
—
1,054
188
—
28
—
TOTAL
441
1,270
The number of Directors of the Company whose total remuneration falls within the following bands is as follows:
Number of Directors
Executive Director
Non-Executive Directors
RM50,000 and below
RM50,001 to RM100,000
RM450,001 to RM500,000
RM850,001 to RM950,000
RM950,001 and above
—
—
—
1
—
* This includes YBhg. Tan Sri Dato’ Abdul Khalid Ibrahim who had resigned on 17 June 2004.
10*
—
—
—
—
45
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PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
BOARD COMMITTEES
Nomination Committee
The Board has delegated specific responsibilities to the respective
Committees of the Board which operate within clearly defined terms
of reference. The Board Committees are the Executive Committee,
Finance & Tender Committee, Audit Committee, Nomination
Committee, Remuneration Committee and Employees’ Share Option
Scheme (ESOS) Committee. Ad-hoc Board Committees are being
established, as and when necessary, to address on specific issues.
The Nomination Committee of the Board provides a formal and
transparent procedure for the appointment of new Directors to the
Board of Kumpulan Guthrie Berhad and its subsidiary companies. The
Nomination Committee meets as and when required but shall hold at
least one (1) meeting a year.
The Committees of the Board comprise members of the Board, and
each Board Committee holds separate meetings throughout the
financial year. Meetings of Board Committees provide an avenue for
members of the respective Committees to focus on specific issues
and enable full and in-depth discussions of business operations of the
Kumpulan Guthrie Group. Reviews, recommendations, findings and
decisions reached at these Committee Meetings are reported directly
to the Board for its deliberations, approvals and/or endorsements. The
members of the various Committees are set out on page 30 of this
Annual Report.
Scope of Responsibilities
The Nomination Committee’s responsibilities include the following and
such other responsibilities as may be determined by the Board from
time to time:
•
To consider and make recommendations to the Board on the
suitability of candidates nominated for appointment on the Board,
including that of the Group Chief Executive/Managing Director and
Executive Directors, and also for appointment of Directors on the
Boards of Directors of the active subsidiary companies, including
those of the two public-listed subsidiary companies, namely
Guthrie Ropel Berhad and Highlands & Lowlands Berhad;
•
To consider and make recommendation to the Board, Directors to
fill the seats on Board Committees; and
•
To review and make recommendations to the Board, on an annual
basis, the required mix of skills and experience and other
qualities, including core competencies of the non-executive
Directors.
Executive Committee
The Executive Committee which meets, at least every quarter in a
year, examines in depth strategic matters, policies and business risks
which may affect the Group. The Executive Committee recommends
to the Board the strategic direction for the Group’s business and
reviews the results of the direction taken by the Group.
Finance & Tender Committee
The Finance & Tender Committee (“F&T Committee”) meets at least
every quarter in a year. The F&T Committee considers and makes
recommendations to the Board on the impact of any financial issues
affecting the Group. It also reviews the monthly performance of the
Group, the Group’s borrowings and cash flow position.
Audit Committee
The composition and functions of the Audit Committee are laid down
on pages 38 to 39 of this Annual Report.
46
Remuneration Committee
Primary purpose
The Remuneration Committee, whose members comprises nonexecutive Directors, meets on a need basis, to review and recommend
to the Board the framework of executives’ remuneration and its costs
and, the remuneration packages of Executive Directors and Heads of
Divisions of the Group, in all its forms. As the Executive Directors are
not members of the Committee, they do not play any part in the
decisions of their own remuneration. Notwithstanding that, the
remuneration of both the Non-Executive and Executive Directors is the
ultimate responsibility of the entire Board.
The responsibilities of the ESOS Committee are as follows:
•
To administer the Scheme in accordance with the Bye-Laws of the
Second ESOS and, in such manner, as it shall in its discretion
deem fit and within such powers and duties as conferred upon it
by the Board.
•
To review and recommend to the Board at any time and, from
time to time, any provision of the Second ESOS’ Bye-Laws,
provided that the amendments are not prejudicial to the eligible
employees and with prior approval of shareholders of the
Company.
Employees’ Share Option Scheme (ESOS) Committee
The Company believes that people are its greatest assets. The ESOS
was established with the objective to provide an opportunity for
eligible employees of the Company and of the Group and, Executive
Directors of the Company to participate in the equity of the Company.
The objectives of ESOS are, among others, to motivate employees of
the Group to excel and strive towards better performance for greater
career achievement, increase the level of commitment, dedication and
loyalty amongst employees, attract prospective employees to fill key
positions and, reward and retain key employees whose services are
vital to the overall business operations and continued growth of the
Kumpulan Guthrie Group.
Following the expiration of the First ESOS of Kumpulan Guthrie
Berhad on 15 November 2002, the Company established the Second
ESOS (“the Scheme”), which had been approved by the shareholders
of the Company at its Extraordinary General Meeting (EGM) held on
18 June 2003. The Second ESOS, which came into effect on
30 July 2003, will be in force for a period of five (5) years, until 29
July 2008 and can be extended or renewed for another maximum
period of five (5) years, as prescribed in the Bye-Laws of the Scheme.
The Scheme is governed by the Bye-Laws which are administered by
an ESOS Committee appointed by the Board. The ESOS Committee,
comprising three (3) members of the Board, meets at least every
quarter during the relevant financial year.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN
RESPECT OF AUDITED FINANCIAL STATEMENTS
Company Law requires Directors to prepare financial statements for
each financial year which give a true and fair view of the state of
affairs of the Company and the Group together with the profit or loss
of the Company and of the Group.
In preparing those financial statements, the Directors have:
a)
adopted suitable accounting policies and applied them
consistently;
b)
made judgements and estimates that are reasonable and
prudent;
c)
ensured applicable accounting standards have been followed,
subject to any material departures disclosed and explained in
the financial statements; and
d)
prepared the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
47
The Directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position of the Company and of the Group, to enable them to ensure
that the financial statements comply with the Companies Act, 1965.
The Directors are also responsible for taking reasonable steps to
safeguard the assets of the Company and the Group and, in that
context to have proper regard to the establishment of appropriate
systems of internal control with a view to prevent and detect fraud
and other irregularities.
STATEMENT ON GOING CONCERN
The Board, having reviewed the budgets and long-term business
plans of the Company and of the Group, has a reasonable expectation
that the Company and the Group have adequate resources to continue
in operation for the foreseeable future. Accordingly, the financial
statements of the Company and the Group have been prepared on a
going concern basis.
ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board aims to present a balanced, clear and comprehensive
assessment of the Company’s and the Group’s performance and
prospects by ensuring quality financial reporting to its shareholders,
investors and regulatory authorities.
Shareholders, investors and regulatory authorities are kept abreast of
the Company’s and the Group’s performance during the financial year,
through the timely announcement of the Company’s and the Group’s
quarterly financial results and publication of the same in leading
newspapers, and timely distribution of the Company’s Annual Report.
The Chairman’s Statement and the Operations Review of the Group,
contained in this Annual Report, also provide an insight into the
performance of the Group throughout the financial year and on the
Group’s future prospects.
Quarterly financial results and annual financial statements are
reviewed and deliberated upon by the Audit Committee of the Board
to ensure the accuracy and adequacy of such information, prior to
submission to the Board for its approval. Such information is released
to the public upon approval by the Board.
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PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
Relationship with Auditors
The Board maintains an active, transparent and professional
relationship with the Group’s Auditors, through the Audit Committee,
which has been conferred with the authority to interface directly with
both the external and internal auditors of the Group.
During the financial year, the Group’s External Auditors, conducted an
audit of the Company and its subsidiary companies, to obtain
information and explanation so as to provide reasonable assurance
that the financial statements present a true and fair view of the
Group’s performance. After the completion of the audit, a Management
Letter was presented by the Auditors to the Board raising significant
issues arising from the audit of the Group. The Board, through the
Audit Committee, also seeks the External Auditors’ professional advice
in ensuring compliance with the appropriate accounting standards in
Malaysia and the provisions of the Companies Act, 1965. The
functions of the Audit Committee and its relations with the Auditors
are set out on pages 38 to 39 of this Annual Report.
The activities of the Internal Auditors relating to the operation of the
Group during the financial year are set out on page 39 of this Annual
Report.
Relationship of the Board to Management
Whilst the Board retains overall responsibility for and control of the
Group, it also effectively monitors Management. Management of the
Group’s businesses is conducted by the Chief Executive Officer and
Senior Management of the various divisions and departments which
implement the policies and strategies adopted by the Board within the
limits of authority laid down by the Board. The Board also ensures
the smooth running of the Company’s and the Group’s operations by
establishing a succession plan for top Management.
The Board measures Management’s performance against the Group’s
objectives and most importantly ensure that any implementation of
policies and strategies are in the best interests of the shareholders of
the Company.
48
RELATIONSHIP WITH INVESTORS AND SHAREHOLDERS
The Board believes that disclosure is at the heart of good governance
as it ensures that market credibility and investors’ confidence are
maintained. In discharging the obligations imposed by the Listing
Requirements of Bursa Malaysia on listed companies, the Company
discloses material information in a timely, complete, clear and
accurate manner which enables shareholders and investors to make
informed investment decisions, and assist investors and the market in
the evaluation of the Company’s securities.
Directors are also continuously updated and advised of any new
regulations or directives issued by Bursa Malaysia, Securities
Commission and other regulatory authorities which must be adhered
to by the Company.
The Annual Report, including the Financial Statements sections of the
Annual Report, is printed in English as well as in Bahasa Malaysia to
reach out to a wider audience of investors.
Briefing to Analysts and Institutional Shareholders
The Management of Kumpulan Guthrie Berhad conducts, on annual
basis, dialogues and briefings with financial analysts, brokers and
institutional fund managers, and investors on the Kumpulan Guthrie
Group’s financial results, performance and potential of new
developments/business. This is to ensure that the investing
community receives a balanced and complete view of the Kumpulan
Guthrie Group’s performance and the current issues faced by the
business in the regional and global economic climate.
The AGM provides the opportunity for interaction among
shareholders, Directors and Management, where issues pertaining to
the Annual Report, interim and quarterly reports, announcements to
Bursa Malaysia and Circulars to Shareholders could be raised and
explained.
At each AGM, the Directors welcome the opportunity to gather the
views of minority shareholders, who represent the largest proportion
of shareholders attending the AGM. Shareholders (and proxies) may
enquire, among others, on the resolutions being proposed at the
AGM, business operations of the Group, the Group’s past
performance, its results and intended future performance. The Board
provides adequate time for the shareholders’ question-and-answer
session, which the Board believes is paramount to the proper and
efficient operation of the AGM.
Representatives of the Management are also present at each AGM to
answer questions on the business operations of the Group. This
ensures a high level of accountability, transparency and identification
with the Group’s business operations, strategies and goals.
COMPLIANCE WITH THE CODE ON CORPORATE
GOVERNANCE
The Kumpulan Guthrie Group was substantially in compliance with the
principles of corporate governance and best practices in corporate
governance throughout the financial year ended 31 December 2004.
Information relating to the Company and the Group could also be
viewed via the Company’s website at www.guthrie.com.my.
OTHER INFORMATION
The Annual General Meeting
The Company and/or its subsidiary companies had not entered into
any material contract which involved Directors’ and/or major
shareholders' interests, either still subsisting at the end of the
financial year, or which were entered into since the end of the
previous financial year.
The Annual General Meeting (AGM) is the principal forum in which
the Board reports on its stewardship to shareholders and account for
the performance of the Company and of the Group.
Material Contracts
49
Material Contracts Related to Loan
During the financial year under review, there were no material
contracts related to loans, entered into by the Company and/or its
subsidiary companies which involved Directors’ and/or major
shareholders’ interests.
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
institutions. As this centralised treasury system entails the provision
of financial assistance between the Kumpulan Guthrie Group, H&L
and Ropel, the Board, thus, proposes to seek renewal of the Financial
Assistance Mandate at the forthcoming EGM of the Company.
Share Buy-Back
Options, Warrants or Convertible Securities
As at 31 December 2004, 5,212,000 option shares were exercised
under the Second ESOS.
The Directors had obtained a relief under Section 169A (1) of the
Companies Act, 1965 exempting the Company from having to
disclose the names of option holders granted less than 50,000 option
shares each during the year in the Annual Report. This exemption is
subject to a yearly renewal. All information regarding the allocation
and exercise of the said option shares are registered in the
Company’s Register of Options.
During the financial year under review, the Company has not
exercised any share buy-back permitted by Section 67A of the
Companies Act, 1965 of which mandate was given by the
shareholders at the last EGM of the Company held on 17 June 2004.
Non-Audit Fee
During the financial year ended 31 December 2004, apart from the
annual audit fees, the Group had paid non-audit fees to the External
Auditors amounting to RM489,000/- for other services undertaken by
the Auditors for and on behalf of the Group, during the financial year.
Profit Estimation, Forecast or Projection
The names of option holders who were granted with 50,000 or more
option shares under the Second ESOS as at 31 December 2004 are
as set out in the Directors’ Report – Second Employees’ Share Option
Scheme, on page 117 of this Annual Report.
Proposed Provision of Financial Assistance Mandate
At the last Extraordinary General Meeting (EGM) held on
17 June 2004, the Company had obtained the Financial Assistance
Mandate from its shareholders to enable the financial assistance
transactions to be effected between the Kumpulan Guthrie Group and
Highlands & Lowlands Berhad (H&L) and Guthrie Ropel Berhad
(Ropel), via a centralised treasury management system for an
estimated net amount of RM40 million and RM10 million respectively,
subject to it not exceeding the 5% benchmark under the Listing
Requirements of Bursa Malaysia.
Pursuant to the Management Agreements entered into by the
Company with H&L and Ropel, the treasury functions for all the
plantation companies within the Guthrie Group, are centralised and
the services include remittances to the estates, mills, centralised
receipt and payments, and placement of funds with financial
There was no profit estimation, forecast or projection made or
released by the Company during the financial year under review.
Profit Guarantee
There was no profit guarantee given by the Company during the
financial year under review.
Revaluation Policy of Landed Properties
The revaluation policy of the Group in relation to its landed properties
is set out in Note 3(d) of the Notes to the Financial Statements on
page 130 of this Annual Report.
Imposition of Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Company
and/or its subsidiary companies, Directors or Management arising
from any significant breach of rules/guidelines/legislation by the
relevant regulatory bodies.
50
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
i.
Renewal of General Mandate
At the last EGM held on 17 June 2004, the shareholders of the Company had approved the renewal of the mandate to allow the Company
and/or its subsidiary companies, in their normal course of business, to enter into recurrent transactions of a revenue or trading nature with
related parties (“RRPT Mandate”), which are necessary for its day-to-day operations on terms not more favourable to the related party than
those generally available to the public and are not to the detriment of the minority shareholders.
The Kumpulan Guthrie Group proposes to continue entering into recurrent related party transactions with its related parties, and, thus,
proposes to seek renewal of the RRPT Mandate in the forthcoming EGM of the Company. This RRPT Mandate, if approved by shareholders,
will be valid until the conclusion of the next AGM of the Company.
ii.
Aggregate value of RRPT
The aggregate value of the recurrent transactions of a revenue or trading nature conducted for the year under review between the Company
and/or its subsidiary companies with related parties are set out below:
Aggregate Value of
Transactions during the
year under review
RM‘000
Company
Relationship
Nature of Transactions
Highlands
& Lowlands
Berhad and
Highlands &
Lowlands Group
• As at 31 December 2004, Kumpulan
Guthrie Berhad (“Guthrie”) held 54.53%
of the issued and paid-up share capital
of Highlands & Lowlands Berhad
(“Highlands & Lowlands”). Guthrie is the
holding company and Managing
Agent of Highlands & Lowlands.
a. Provision of Managing Agent’s
Services by Guthrie to the
Highlands & Lowlands Group.
9,561
b. Provision of Marketing Agent’s
Services by Guthrie to the
Highlands & Lowlands Group.
7,059
• Y.M. Raja Tan Sri Muhammad Alias Raja
Muhammad Ali is a Director and Chairman
of Highlands & Lowlands. He is also a
Director of Guthrie.
• YBhg. Datuk Mohamed Adnan Ali is a
Director of Highlands & Lowlands and
Guthrie.
• YBhg. Datuk Khoo Eng Choo is a Director
of Highlands & Lowlands and Guthrie.
• YBhg. Tan Sri Dato’ Abdul Khalid Ibrahim
is a Director of Highlands & Lowlands and
Guthrie until 10 June 2004 and
17 June 2004 respectively. He is also a
shareholder of Guthrie.
51
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
Aggregate Value of
Transactions during the
year under review
RM‘000
Company
Relationship
Nature of Transactions
Guthrie Ropel
Berhad and Guthrie
Ropel Group
• As at 31 December 2004, Guthrie, the
holding company and Managing Agent of
Guthrie Ropel Berhad (“Ropel”), held
57.85% of the issued and paid-up share
capital of Ropel.
a. Provision of Managing Agent’s
Services by Guthrie to the
Ropel Group.
4,204
b. Provision of Marketing Agent’s
Services by Guthrie to the
Ropel Group.
2,941
Lease of plant and machinery to
the Guthrie Ropel Group.
3,374
Provision of Management’s Services
by Guthrie to GPDH Group.
3,308
Provision of Landscaping Services and
civil works by GLSB to GPDH Group.
23,439
• YBhg. Datuk Alladin Hashim, is a Director
and Chairman of Ropel. He is also
a Director of Guthrie.
• YBhg. Tan Sri Dato’ Dr. Wan Mohd. Zahid
Mohd. Noordin is a Director of Ropel and
Guthrie.
• YBhg. Dato’ Muhammad Nawawi Arshad
is a Director of Ropel and Guthrie.
• YBhg. Tan Sri Dato’ Abdul Khalid Ibrahim
is a Director of Guthrie and Ropel until
17 June 2004 and 31 December 2004
respectively. He is also a shareholder
of Guthrie.
Guthrie Assets
Management
Sdn. Bhd. (“GAMSB”)
• GAMSB is a 67%-owned subsidiary company
of Guthrie and a 33%-owned
associated company of Guthrie Ropel.
• Madam Tong Poh Keow and Encik Helmy
Othman Basha, Directors of GAMSB,
are also Directors of companies in the
Guthrie Ropel Group.
Guthrie Property
Development
Holding Berhad
(GPDH) and GPDH
Group
• GPDH is a 54.77%-owned subsidiary
company of Guthrie and a 45.23%-owned
associated company of Highlands
& Lowlands.
• YBhg. Tan Sri Dato’ Dr. Wan Mohd. Zahid
Mohd. Noordin is the Chairman of GPDH.
He is also a Director of Guthrie.
• YBhg. Dato’ Muhammad Nawawi Arshad
is a Director of GPDH and Guthrie.
• YBhg. Datuk Khoo Eng Choo is a Director
of GPDH and Guthrie.
• YBhg. Dato’ Abd Wahab Maskan, the
Group Chief Executive of Guthrie, is also
a Director of GPDH (w.e.f. 16 January
2004).
Guthrie Landscaping
Sdn. Berhad (GLSB)
• GLSB is a wholly-owned subsidiary of
Guthrie.
• Madam Tong Poh Keow and Encik Helmy
Othman Basha, Directors of GLSB,
are also Directors of the companies in
the Highlands & Lowlands Group and
Ropel Group.
52
Statement on
INTERNAL CONTROL
Pursuant to Paragraph 15.27(b) of the Listing
Requirements of Bursa Malaysia Securities Berhad
INTRODUCTION
KEY ELEMENTS OF INTERNAL CONTROL FRAMEWORK
The Malaysian Code on Corporate Governance places the onus for
Internal Control on the Board. It states: “The Board should maintain
a sound system of internal control to safeguard shareholders’
investment and the company’s assets”.
The current system of internal control currently applied in the Group
has the following key elements:-
The Board of Directors of Kumpulan Guthrie Berhad (“Board”) is
committed to maintaining a sound system of internal control in the
Group and is pleased to provide hereinafter the annual update and
disclosure statement in respect of the state of internal control in
Kumpulan Guthrie Berhad as a Group.
ACKNOWLEDGEMENT OF RESPONSIBILITIES
The Board affirms its responsibility for maintaining a sound system
of internal control. It recognises that reviewing the Group’s system of
internal control is a concerted and continuing process. However, it
should be noted that these systems are designed to manage rather
than to eliminate the risks of failure to achieve business objectives
and as such, could only provide reasonable but not absolute
assurance against material misstatement or loss.
The Board has reviewed and confirmed that the system of internal
control within the internal control framework was in place during the
financial year under review and continues to take measures to
strengthen the internal control framework. The Board also confirms
that there were no material losses incurred during the financial year
as a result of weaknesses in internal control.
Standard of Business Ethics
All employees are required to sign and adhere to the Standard of
Business Ethics, which emphasises corporate values and ethical
code of conduct. The Standard of Business Ethics represents the
employees’ undertaking to adhere to the Group’s minimum standard
of behaviour and ethical conduct.
Enterprise-wide Risk Management
The Board views Structured Enterprise-wide Risk Management (ERM)
as the logical step in the pursuit of its corporate governance agenda
and the fulfilment of its long-term corporate objectives towards
protecting shareholders’ investment and safeguarding organisational
assets.
The ERM program provides sufficient documentation and groundwork
for the implementation of risk based audit approach. The Internal
Auditors besides performing audit on the adequacy and integrity of
internal controls also provide assurance on how effective the risks are
being managed through the risk based audit approach. The risk based
audit approach is currently being implemented on certain units in
Malaysia and will be expanded to include other subsidiaries including
overseas subsidiary companies.
53
Human Resource Management
A systematic Performance Management and Development (PMD)
system which is linked to and guided by established Key Performance
Indicators (KPI’s) and Key Result Area’s (KRA’s) has been implemented.
The PMD system is now being driven by the Balanced Score Card
system (BSC) to support its delivery. The BSC provides a framework
to translate strategy into operational terms and is being used as a
performance measurement tool.
The PMD system has been implemented on personnel at the executive
and managerial level and will be expanded to include the clerical level.
Training and Development
Emphasis is placed on enhancing the quality and ability of employees
through continuous training and development. Through the PMD
system, employees’ competencies are being properly addressed and
suitable training programmes or schemes will be identified to expand
on the competencies.
Policies, Procedures and Financial Authority Limit
Delegation of authority including authorisation limits at various levels
of management and those requiring the Board’s approval are clearly
defined and set out in written policies and procedures to ensure
accountability and proper segregation of duties.
Regular Monthly Reporting
Monthly meetings of the Group Management Committee are
conducted to review and monitor matters pertaining to the business
operations based on performance reports which provide comprehensive
information on financial performance and other key non-financial
indicators.
Tender Award System
A policy on awarding of tender has been revised to enhance
coordination and control on the purchase of goods and services. The
policy serves to gain efficiency and place assurance on the
effectiveness of the system of internal control embedded in the
process of awarding tenders.
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
Insurance & Physical Safeguard
Adequate insurance on major assets i.e. buildings and machineries in
major operating subsidiary companies is in place to ensure that
assets of the Guthrie Group are sufficiently covered against any
mishap that will result in material losses to the Group and/or its
subsidiary companies.
Strategic Business Planning, Budgeting and Reporting
The annual budget is linked to the Group Strategic Business Plan. The
Group Strategic Business Plan was approved in December of the year
under review. The Group Strategic Business Plan is the basis upon
which the budget will be reviewed and tracked periodically during the
budget year.
Management Information System
Critical information of the Group such as financial data, human
resource data, land ownership records and debtors record are
captured within the various information systems that have been
developed to keep track of the Group’s operations.
Group Internal Audit
The Internal Audit function, which reports directly to the Audit
Committee provide assurance on the effectiveness of the system of
internal control within the Group. Independent reviews based on the
annual internal audit plan are conducted to identify and report risks
in units under the Group’s major core activities.
MONITORING AND REVIEW OF THE EFFECTIVENESS OF
THE SYSTEM OF INTERNAL CONTROL
The processes adopted to monitor and review the effectiveness of the
system include:
•
Issues highlighted by the Group Internal Auditors and the
corrective actions taken by management are discussed and
monitored by the respective operating units in its monthly
meetings.
•
Quarterly reports to the Audit Committee are formatted such that
all corrective actions taken on issues highlighted by the Internal
Auditors are tracked according to the progress of completion.
54
INTERNAL CONTROL FRAMEWORK & ENVIRONMENT
SHAREHOLDERS
BOARD OF DIRECTORS
ESOS
COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION
COMMITTEE
GROUP CHIEF
EXECUTIVE
External Auditors
EXECUTIVE
COMMITTEE
FINANCE &
TENDER
COMMITTEE
AUDIT
COMMITTEE
INTERNAL AUDITORS
Strategic
Business
Planning &
Budgeting
Standard
of Business
Ethics
GROUP MANAGEMENT
COMMITTEE
Enterprise-wide
Risk
Management
Regular
Monthly
Reporting
Support
Divisions/
Departments
Human
Resource
Management
Management
Tender
Committee
Training and
Development
Credit
Committee
Written
Policies &
Procedures
Mill/Estate
Liaison
Committee
MIS &
Technology
Committee
Financial
Authority Limit
Human
Resource
Committee
Group Tender
Award System
Management
Finance
Committee
Business
Divisions/
Units
Insurance &
Physical
Safeguard
The Group’s internal control framework shown above signifies the accountability and
reporting relationship between the Shareholders, the Board, the Audit Committee, Auditors and Management
Organisational Structure
Management Committee
Key Internal Control Element
Management
Information
System
55
Enterprise-wide
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
RISK MANAGEMENT
THR GUTHRIE GROUP HAS ESTABLISHED ITSELF TO BE A MAJOR PLAYER IN THE GLOBAL PALM OIL MARKET.
ITS PLANTATION OPERATIONS TODAY SPAN ACROSS INTERNATIONAL BORDERS INTO INDONESIA. BESIDES ITS
PLANTATION BUSINESS, THE GUTHRIE GROUP’S OTHER CORE BUSINESSES INCLUDE PROPERTY DEVELOPMENT
AND MANUFACTURING. AS A RESULT OF ITS INTERNATIONAL GROWTH AND PROFIT TARGETS, THE GROUP IS
CONTINUOUSLY CONFRONTED WITH A VARIETY OF GLOBAL AND LOCAL BUSINESS RISK FACTORS. THESE
RISKS CAN BE INTERNAL OR EXTERNAL AND IF NOT APPROPRIATELY MANAGED, MAY NEGATIVELY
INFLUENCE THE GROUP’S GOALS AND STRATEGIC OBJECTIVES.
TO ADDRESS THESE RISKS, THE GROUP HAS ESTABLISHED A COMPREHENSIVE ENTERPRISE-WIDE RISK
MANAGEMENT (“ERM”) FRAMEWORK WHOSE MAJOR ELEMENTS INCLUDE THE IDENTIFICATION, ANALYSIS,
REPORTING AND COMMUNICATION OF RISKS.
INHERENT BUSINESS RISKS
RISK CONSIDERATION
Besides the exposure to general business risks, the Guthrie Group is
particularly exposed to certain risks inherent in the palm oil sector.
Clonal palm production through proven tissue culture technology
offers the Group great opportunity to develop an efficient and
commercially reliable clonal palm production system. This was made
possible through our wholly-owned subsidiary, Guthrie Biotech
Laboratory Sdn. Berhad (GBLSB) which had acquired this proven
technology. Recent biotechnological advances recorded high success
rates at the callogenesis and embryogenesis stages of the clonal palm
production. All potential risks and threats to failures had been
identified, assessed and catalogued.
The oil palm plantation business will generally be affected by the
global, regional and national economy. The state of Malaysian
economy, entry of new players, fluctuations in commodity prices and
foreign exchange rates, changes in weather conditions, outbreak of
pests and diseases, constraints in labour supply, escalating
production costs and threat of substitutes for palm products will also
have an impact on the oil palm plantation business.
The Group seeks to limit these risks through effective risk
management practice amongst others, close supervision of oil palm
plantations through periodic review of its risk profile, effective
resource management and cost control policy.
In the property development sector, the Group will be subjected to
certain risks inherent such as the general state of the Malaysian
economy, competition by other developers, changes in government
legislation and policies, sustainability of projects’ income, changes in
property buyers’ demand, financing costs to undertake property
development projects, and shortages of resources such as labour and
building materials.
The Group has within its management team qualified and experienced
personnel from diverse discipline, who are able to plan, mitigate and
minimise the business risks inherent in this sector. In the coming
years, the Group will focus predominantly on the residential market
located strategically in the Klang Valley which would be resilient to
the effects of any downturn in the economy.
In managing this risk, the subsidiary is implementing a dedicated
tracking system called ‘GETS Biotech’ (Guthrie Electronic Tracking
System for Biotech Material). The system enables a computerised
audit trail and bar coding for monitoring, recording and tracking of oil
palm tissue culture materials. This will eliminate manual data entries
which are prone to errors, are tedious and time consuming.
In respect of the current business outlook, no immediate risks have
been identified which could jeopardise the Group’s ongoing business.
The Group’s equity capitalisation and earnings base form a sound
basis for future business development. We have taken the appropriate
precautions against typical business risks that could negatively affect
our financial standing and profitability situation through adopting the
risk management philosophy and the ERM Framework, elaborated
below.
56
The Guthrie Group practices ERM because it offers a consolidated
view of all types of risks and opportunities across the organisation,
management processes and business activities. This strategic stance
enables the Group to apply a risk-centric management approach that
is essential for the establishment of a sound system of risk
management and internal controls.
RISK MANAGEMENT PHILOSOPHY
Risks are a part of business and the Group’s focus is to balance risk
awareness and control with the need to create and exploit
opportunities.
Consistent with this, the Guthrie Group embraces ERM as a strategic
response to its Corporate Governance agenda. Corporate Governance
should be an implicit expectation, like good character, a set of
principles that are simply inherent and understood.
For the period under review, the Group has implemented an ongoing
process for identifying, evaluating and managing the significant risks
faced by the respective business and support units.
To the Group, ERM offers a systematic and disciplined approach to
align strategy, processes, people, technology and knowledge with the
purpose of identifying, evaluating and managing the uncertainties and
risks faced by the Group. By understanding and managing risks, the
Group will be in a better position to provide greater certainty and
assurance to its stakeholders when pursuing growth and valuecreation.
The Group is well positioned to integrate the fundamentals of risk
management into the day-to-day management processes.
ERM FRAMEWORK
GROUP ERM FRAMEWORK
Aligning group strategies, processes, structures, people, technology and knowledge for the
purpose of managing high and significant risks that can prevent the achievement of Group strategies and
objectives, through the systematic and disciplined approach of enterprise risk management process.
VISION
MISSION
STRATEGIC OBJECTIVES
RM Strategy & Policy
(Three -Prong Strategy)
RM Structure
Key Elements
• Risk Reporting
Structure
• Risk Profiles
• Effective
Feedback
• Board's direction
• Collaboration
across the Group
ERM Process
B
C
A
Culture
Process
Focus Areas
To create risk
awareness
work culture
that practices
pro-active risk
management
To embed ERM
process in the
day-to-day
management
practices and
business processes
To practice
risk portfolio
management and
balance the riskreturn opportunities
based on the
Group's risk
appetite and
capacity to
accept risk.
Establish the measuring and monitoring criteria for continuous process of improving
performance - via key performance and risk metrics through corporate scorecards
Measure, Monitor & Report
7-Fundamentals
•
•
•
•
•
•
•
Context & scope
Risk identification
Risk analyses
Risk evaluation
Risk treatment
Risk monitoring
Risk reporting
57
The ERM Framework is flexible and designed to fit into the work
culture and management style of the Group. The ERM Framework
seeks to promote an enterprise risk management practice that;
(i)
will periodically be on the Board’s agenda and that the Board
and Senior Management are made aware and trained on the
principal and major risks.
(ii)
all business units and divisions are responsible for managing
risk with appropriate advisory guidelines from centralised
enterprise risk management function.
(iii)
link risk that matters to business and operational planning and
include risk assessment in the evaluation of new projects.
(iv)
create a risk-awareness work culture that practices pro-active
risk management.
The Group integrates the ERM process into the framework of the
Group’s strategic and annual budget planning processes. High and
significant risk matters are duly reported to Management and Board
and these are in conformance to regulatory requirements.
•
Risk-based Strategic Planning process
The Group practices a rolling three-year strategic planning
process where key value drivers are identified and strategic
business goals and objectives are reviewed, updated and
presented in standardised balanced scorecard perspectives.
Potential risks and threats to the achievements of the business
objectives are assessed, evaluated and prioritised based on
measured business impacts.
This involves the environmental scanning for anticipated changes
in both the internal and external risk-opportunity factors and to
analyse each of the business unit’s and division’s strengths,
weaknesses, opportunities and threats. The existing risk controls
are assessed to determine its control adequacy and effectiveness.
New targeted risk tolerance levels are set to be in line with
enhanced business objectives and risk appetite consistent with
Group’s growth perspectives.
RISK MANAGEMENT STRATEGY AND POLICY
Principally, the Group’s risk strategy is an integral component of the
overall strategy that is set within the context of its business
operations. The scope of its risk management programme and efforts
are aligned to corporate resources and integrated within its strategic
and organisational structure, management processes and business
activities.
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
RISK MANAGEMENT PORTFOLIO AND RISK OPTIMISATION
Measured against the components of best-practice Risk Management
Maturity Framework, the Group has accomplished several initiatives
as part of its strategy to strengthen its risk management practices
and these are set out below, as follows;
The Guthrie Group is committed to the practice of enterprise risk
management. The Group provides training and education to ensure
that its employees have the necessary knowledge and skills to
practice risk management. The Group believes that effective risk
management is much about a culture shift through change
management which encourages best ethics and values in each of its
employees.
01
02
03
04
05
06
•
2005 Budget Planning and Business Plans
Risk-based information gathered during the strategic planning
process is used as part of the 2005 budget planning process and
initiatives. Risk control strategies are planned and incorporated
within the 2005 Budget and Business Plans in order to mitigate
the risk exposures established during the strategic planning
process above. The risk levels will be periodically monitored
during the Budget year based on the key performance and leading
indicators for corrective actions.
The risk-based Budget and Business Plans are then presented to
the Board for its attention and due process of review and
approval.
58
•
Research & Development and Major Projects areas
For the period under review, the Group has extended and incorporated the principles of risk management in project
evaluation of major Group projects including research and development undertakings. Key project criteria are preset
and project risks are identified, prioritised and benchmarked against future outcomes. These will be closely monitored
during the project life-cycle.
The benefit of managing project risks is the avoidance of unexpected time delay and costs overruns and consequently
would result in fewer integration problems.
RISK ORGANISATIONAL STRUCTURE
Risks are classified and prioritised based on its potential impacts to the business. These are further sub-categorised into
risk types based on the risk nature and characteristics. During the period under review, the Group relied on the following
structures to manage its risks;
•
First line of Defense – day-to-day risk management
Day-to-day risk management resides with the respective operating centre.
The Management of each operating centre is accountable for the comprehensiveness of the risks identified, their
assessment, as well as the bottom-up reporting to the Group Management Committee (“GMC”).
•
Second line of Defense – strategic risk and overall risk oversight
For the period under review the GMC, chaired by the Group Chief Executive provides on-line risk oversight through
regular monthly reviews of the business and corporate unit’s performance and its associated risk profiles. The GMC
also provides guidance on the risk appetite and capacity which, when exceeded will trigger obligatory reporting to the
Board.
In addition, there is a Management Finance Committee (“MFC”) which reviews regularly business issues and risks of
the Group.
The Executive Committee, Audit Committee and Finance & Tender Committee provide additional layer of defense and
risk oversight especially on risks that are not easily predicted and monitored through systematic operational procedures
but nevertheless, carry significant impacts on the Group’s business activities and decision-making.
•
Third line of Defense – overall risk management responsibility
The Board retains the overall risk management responsibility of identifying principal risks and ensuring the
implementation of appropriate systems of internal controls with the Group Chief Executive being accountable to the
Board for the effective and efficient risk management practice within the Guthrie Group.
59
•
Group Risk Facilitator
The Guthrie Group has nominated a senior officer responsible for
the establishment and maintenance of the Group’s enterprise risk
management system. The senior officer acts as a central contact
and provides the lead, training and guidance for all the ERM
issues within the Group.
Audit Committee
The Audit Committee receives regular reports from both internal
and external Auditors on internal control standards and matters.
•
Internal Audit
The Internal Audit Department is an independent, unbiased
function and reports directly to the Audit Committee. The Internal
Audit Department is involved in validating the results of the ERM
processes and contributes by means of auditing and provision of
consultancy to the independent assessment of the Group’s risk
situation and the adequacy and effectiveness of its internal
control system.
The key goals and long-term objectives of the Group risk management
program include the following;
•
Clearly documented risk communication program
Promote risk glossary to streamline the communication process.
This will encourage the use of consistent terminology aimed at
increasing the effectiveness of exchanging information about risks
across the enterprise. The Group undertook the publication of a
Risk Awareness handbook in year 2004, written in simple
language to assist better understanding of the risk management
subject, its concept, impact on business processes and
management practices.
•
ERM Policy and Framework Guideline
Establish the Group’s ERM Framework to be embodied in the
Group Policy and Procedural Manual with which the management
of each business and corporate support unit is required to
comply.
•
Risk awareness training and continuing education
Risk awareness program was fully extended to the Group’s
estates. Each estate has its own local risk register and risk
profile. The Estates Risk Management Program with its risk
mitigation plans for 2005 is already in place. The Estates ERM
Program will be monitored on a quarterly basis to assess the
control effectiveness and levels of risk exposures.
•
Risk management as a core management competency
requirement
In order to develop a risk intelligent workforce, employees of the
Group are expected to practice risk management within their own
work areas as part of the Group’s management competency
standard and this will be monitored through the employees’
performance appraisal process.
MEASUREMENT AND MONITORING PERFORMANCE
The Group uses a wide range of key performance indicators (“KPIs”)
and reports to track and monitor performance of each operating
centre. Each reporting centre reports monthly, through the
Performance Review Report, to the GMC. The group-wide and
business units KPIs and risk indicators function as early warning
mechanisms upon which the Group’s risk appetite and capacity are
communicated.
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
ERM GOALS AND LONG-TERM OBJECTIVES
RISK CONTROL ASSURANCE
•
01
02
03
04
05
06
For the Guthrie Group, practicing risk management is not designed to
stop employees from taking risks but rather to create value by
enhancing the chances of achieving corporate success and enabling
managers and shareholders to understand the level of risks
undertaken and to manage the risk-reward profile accordingly.
60
MANAGEMENT TEAM
DATO’ ABD WAHAB MASKAN
GROUP CHIEF EXECUTIVE
YBhg. Dato’ Abd Wahab Maskan, 54, has been the Group Chief
Executive of Kumpulan Guthrie Berhad (KGB) since 1 January 2004.
He was subsequently appointed a Director of KGB, Highlands &
Lowlands Berhad, Guthrie Ropel Berhad, Guthrie Property Development
Holding Berhad and other subsidiaries of KGB. Other public companies
in which he is a Director are Pelaburan Hartanah Nasional Berhad and
Pengurusan Danaharta Nasional Berhad. Dato’ Abd Wahab has been
appointed a member of the Financial Reporting Foundation of the
Ministry of Finance effective 28 January 2005.
Dato’ Abd Wahab has held positions as Group Chief Executive of
Golden Hope Plantations Berhad, Managing Director and Chief
Executive Officer of Negara Properties (M) Berhad, General Manager
of Island & Peninsular Berhad and Director of Development in Urban
Development Authority (UDA).
He has held directorships in Malaysian and overseas companies in
Europe and Asia, both listed and non-listed companies. His
directorship and leadership experience covers property development
and investment, engineering and construction, plantations and
processing management, refining and olechemicals, trading and
marketing, manufacturing and retailing, resort and hospitality, in both
the public and private sectors.
Dato’ Abd Wahab obtained his Bachelor of Science degree in
Management (Real Estate), England. He is a Fellow of the Institution
of Surveyors (Malaysia) and a Fellow of the Royal Institution of
Chartered Surveyors (England and UK).
61
01
02
03
04
05
06
PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
RUSLI UJANG
– Head, Plantation Malaysia
Encik Rusli Ujang, aged 49, has been Head, Plantation Malaysia since 1 February 2005. A graduate
of Universiti Pertanian Malaysia, Serdang (UPM) (now known as Universiti Putra Malaysia) in
Agriculture Science, he joined the Group on 16 April 1978 as an Assistant Estate Manager and
was then promoted to Senior Assistant Manager (from 1984-1990). Subsequently, he served as
an Estate Manager in various estates within the Group from 1991 to 2000.
Encik Rusli was a member of the Task Force Management of Minamas Plantation in 2001 before
being promoted to General Manager, Estates in Kalimantan, Indonesia in 2002, and subsequently
Head for Kalimantan Selatan & Sulawesi in 2003. He has attended the Management Development
Programme at the Asian Institute of Management in Manila, Philippines.
MD TAHIR MOHAMMED
– Head, Plantation Indonesia
Encik Md Tahir Mohammed, aged 50, joined the Group as Group Head, Plantation Indonesia on
1 November 2004. He is based in Jakarta as President Director of PT Minamas Gemilang and
PT Anugerah Sumbermakmur.
A graduate in Plantation Management from Institute Teknologi Mara (now known as Universiti
Teknologi Mara), he served as Director, Plantation for Island & Peninsular Berhad. He has been in
the plantation industry for more than 28 years, serving various capacities with other plantation
companies such as Plantation Agencies, Asiatic Development Berhad and Kuala Lumpur Kepong
Berhad.
TENGKU AB. AZIZ TENGKU MAHMUD
– Head, Property and Chief Executive Officer, Guthrie Property Development Holding Berhad
Y.M. Tengku Ab. Aziz Tengku Mahmud, aged 47, joined Kumpulan Guthrie Berhad as Head,
Property and the Chief Executive Officer, Guthrie Property Development Holding Berhad on 1 April
2005. He graduated from Loughborough University of Technology, UK with a Bachelor of Science
(Hons) in Civil Engineering in 1980. He obtained his Masters in Business Administration from
Cranfield Institute of Technology, UK in 1991 and a Diploma in Management with Merit from
Malaysian Institute of Management (MIM) Kuala Lumpur in 1984.
Y.M. Tengku Ab. Aziz Tengku Mahmud is a registered member of the Institution of Engineers
Malaysia (MIEM), the American Society of Civil Engineers (MASCE) and the Malaysian Institute of
Management (MMIM). Prior to joining the Group he was the Managing Director of Kumpulan
Hartanah Selangor Berhad. He also served on board Selangor State Government related companies
for 10 years (SAP Holding Berhad and Worldwide Holdings Berhad). Prior to that he also served
with Pernas Hotel Chains Holding Sdn. Bhd., Malaysian Mining Corporation Berhad, Jabatan Kerja
Raya Malaysia, Island & Peninsular Berhad and Trimula Sdn. Bhd. in a senior management capacity.
62
TONG POH KEOW
– Chief Finance Officer, Finance & Corporate Services
Madam Tong Poh Keow, aged 51, has been the Group’s Chief Finance Officer, Finance & Corporate
Services since April 2003. She joined the Group in 1983 as the Accountant-cum-Assistant
Company Secretary for Highlands & Lowlands Berhad, and was subsequently promoted to General
Manager, Accounting & Financial Reporting in 1997 and Group General Manager, Finance (Group
Accounting & Financial Reporting) in 2001.
Madam Tong is a member of the Malaysian Institute of Accountants, a Fellow of the Association
of Chartered Certified Accountants, UK and a member of the Institute of Chartered Secretaries &
Administrators, UK. Prior to joining the Group, she was an Accountant cum Company Secretary
with Shapadu Holdings Sdn. Berhad and Assistant Manager, Secretarial and Management Services
at Messrs. Heng & Monteiro.
HELMY OTHMAN BASHA
– Head, Corporate Planning & Strategic Development
Encik Helmy Othman Basha, aged 38, has been Head, Corporate Planning & Strategic Development
since 1 July 2004. He joined the Group in 1997 as Finance & Administration Manager of the
Group’s Property Division. He also served as General Manager, Guthrie Landscaping Sdn Bhd and
General Manager, Finance, Property Division of the Group. Encik Helmy was promoted to Group
General Manager, Finance in 2001 in charge of Group Treasury and Minamas Plantation, Indonesia
(Finance). Subsequently he was promoted to Head, Marketing, Plantation in November 2003.
A Fellow of the Association of Chartered Certified Accountants, UK (FCCA) and a member of the
Malaysian Institute of Accountants, he began his career as a Trainee Accountant with Wellers
Accountancy, Oxford, UK in 1988. He then joined Shell Malaysia as Head of Accounts for Shell
Refining Company in Port Dickson in 1991 and went on to various other postings. His last position
was as Advisor in the Corporate Finance Department of Shell Malaysia Limited, Kuala Lumpur,
where he was in charge of Indirect Taxation for all Shell companies in Malaysia.
ONG SEE BOON
– Head, Engineering & Mill Services
Mr. Ong See Boon, aged 54, has been Head, Engineering & Mill Services since 1 April 2003. He
joined the Group in 1995 as Controller, Engineering Services and was subsequently promoted to
Group Controller, Process & Engineering in 2001 and Group General Manager, Process &
Engineering in 2002. He obtained his Bachelor of Engineering (Mechanical) degree from University
of Malaya in 1976 and his Masters in Business Administration from University of Hull, UK in 1993.
Mr. Ong began his career as Project Processing Officer at Malaysian Industrial Development
Authority (MIDA) in 1976. He then joined Harisson & Crossfield (later known as Golden Hope
Plantations Berhad) in 1977 as Trainee Engineer and became a Mill Design and Visiting Engineer in
1988. He left Golden Hope Plantations Berhad in 1992 to join Perkebunan Sinar Mas II as Head of
Engineering Department in Indonesia until mid-1995. He is a Member of The Institute of Engineers,
Malaysia and is registered with the Board of Engineers, Malaysia as a Professional Engineer.
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PERFORMANCE REVIEW
CORPORATE FRAMEWORK
PERSPECTIVES
BUSINESS SEGMENTS
CORE SERVICES
FINANCIAL STATEMENTS
ABU SAMAH SAMSURI
– Head, Marketing
Encik Abu Samah bin Haji Samsuri aged 45, joined the Group as Head, Marketing on 15 October
2004. He holds a Bachelor of Science (Honours) with a major in Chemistry and a minor in
Management from Universiti Sains Malaysia, Penang in 1985. He was an Executive at Eastern
Plantation Agency (J) Sdn Bhd from 1985 to 1989. From 1989 to 1991, he was a Marketing
Manager at Plantation Agency Sdn Bhd, Penang. He subsequently joined East Asiatic Company Bhd
which is now known as Hap Seng Consolidated Bhd as its Manager, Commodities Trading in 1991.
His last position in Hap Seng Consolidated Bhd was General Manager, Commodities Trading, a
position which he held since his promotion in 2000.
SAADIAH HAJI HUSSIN
– Head, Human Resource
Puan Saadiah Haji Hussin, aged 52, has been Head, Human Resource since 1 October 2004. Puan
Saadiah joined the Group in 1998 as Group General Manager, Human Resource.
A graduate of University of Malaya in Economics, she served with Rothmans of Pall Mall (M)
Berhad (now known as British American Tobacco) as Manager, Compensation/Benefits, Human
Resource Department. Prior to that, she worked for Perbadanan Kemajuan Negeri Selangor in the
areas of investment, supply and procurement, and training and development.
NORZILAH MEGAWATI DATO’ ABDUL RAHMAN
– Head, Legal & Compliance
Puan Norzilah Megawati Dato’ Abdul Rahman, aged 45, has been Head, Legal & Compliance since
1 March 2004. She joined the Group in 1994 as Manager, Group Chief Executive’s Office. She was
subsequently promoted to Controller, Corporate Business Development & Monitoring in 1996 and
Director, Corporate Business Development & Human Resource in 2001. She obtained her degree
in Law (Honours) from the University of Malaya and served as Executive in the areas of
investment analysis, money market trading, corporate secretarial and legal work with Permodalan
Nasional Berhad (PNB) and as Manager, Group Chief Executive’s Office at PNB.